market rules - ecb

Namibia MSB Market Workshop:

Market Rules

20th September 2019

1. Review of Market Rules

2. Review of the Processes & Procedures

3. Review of Wheeling Framework

Lunch

4. Wheeling Examples Using the Models

20 September 2019 MSB Market Rules & Wheeling Framework 2

INTRODUCTION

Purpose of this Workshop

1. MSB Market opened - 1st September 2019

2. All pending licence applications and all new licence applications - will now be

assessed in terms of the MSB Market Design, Rules and Wheeling Framework;

Generators & Exporters

3. ECB will now accept applications from Contestable Customers – All Transmission

connected customers including Distributors are now Contestable; ECB will confirm

Contestable Supply Points & Quantities in conjunction with MO

4. ECB/ MO are ready to accept trades under Draft Rules and Procedures

5. MSB Market is open!


MARKET DEVELOPMENT PROCESS

Timelines for Implementation

TRADING ARRANGEMENTS

1a

20 June 2019 MSB Presentation - Distributors Workshop 5

ELIGIBILITY CRITERIA

Summary

Phases1a

(1st Sep 2019 – June 2021)

1b

(July 2021 – June 2026)

2

(July 2026)

Contestable Purchases -National Cap

• 30% of total national purchases • 30% of total national purchases • As determined by Regulator

Contestable Purchases –Customer Supply Point Cap

• 30% of total customer purchase • For Distributors this volume is

reduced by 30% of the purchases by ≥1MVA connected customers

• As determined by Regulator • As determined by Regulator

Contestable Customers • Tx Connected

• Tx connected• Dx connected (≥1MVA)• Dx connected (<1MVA) as

determined by Regulator

• Tx connected• Dx connected (≥ 1MVA)• Dx connected (<1MVA) as

determined by Regulator

IPPs

• Licensed• Tx or Dx connected• Capacity ltd by sales to Contestable

Customers


Customers


Customers

Exporters• Licensed• No size limit

• Licensed• No size limit

• Licensed• No size limit

Traders• On application and approval by

Regulator; Licensed• No trading volume limit

• Licensed• No trading volume limit

• Licensed• No trading volume limit

Importers • Not allowed • Not allowed• Licensed• Capacity ltd by sales to Contestable

Customers

Aloe Investment No 27 (5MW) – Rosh Pinah

MARKET RULES

MARKET RULES

-

OVERVIEW &

APPLICATION OF RULES

1. MSB Market Design: approved by the Government of the Republic of Namibia in April

2019.

2. ECB:

a) is mandated by legislation as the administrative authority of the Market Rules

compile, approved and implemented for the benefit of the electricity industry.

b) will amend and update the Rules as required, through a consultative process, and

in accordance with a transparent rule change methodology

c) will submit Rules for gazetting in October 2019


MARKET RULES

Governance

These rules pertain to the services offered in Phase 1 of the MSB Market, that are required to facilitate bilateral trading.

In Phase 1, these services include:


MARKET RULES

Trading Products & Services for Phase 1

Service Impacted Notes

Scheduling of binding hourly bilateral energy trades

Between Eligible Sellers (ES) and Contestable Customers (CC)

For each of the 24 hours of the Delivery Day, starting at midnight (00h00)

Energy balancing ES In case of deviations from the agreed schedules

Voluntary Energy Banking MO To deal with any planned excess generation by ES

Metering, invoicing and settlement

MO for Distributor and CC Check Timeline


MARKET RULES

Future Products & Services (incl. Phase 2)

1. It is anticipated that future

developments of the MSB may

include:

a) A Day-ahead Market

b) An Intra-day Market

c) A Balancing Market

d) Demand side participation

e) Specific Ancillary Services

products

1. In subsequent phases, including

Phase 2, the Market Rules and

services maybe be expanded to

include:

a) a facility to match short term

trading (e.g. bulletin board)

b) a day-ahead, ancillary service

and balancing trading platform

c) access to regional trading

d) financial trading platforms

Markets Services


MARKET RULES

Market Participants & Authorisations

Participant Authorisation

Market Operator (MO) Included in Transmission License

System Operations (SO) Included in Transmission License

Eligible Generator Generation License

Contestable Customer Approval from Regulator

Trader Trading License

Importer Import License

Exporter Export License

1) The MSB Market Rules apply to all MP, taking into account the following exemptions:

a) All Generators licensed before 1st September 2019

b) All off-grid Generators

2) Any Generator that is exempted from the MSB Market Rules, will become subject to

the MSB Market Rules upon application and approval to participate in the MSB

Market, or automatically upon renewal of their licence.

1. Apply to ECB to become a Market Participant - signifies intent to take up 30%

the ECB will confirm your contestable quantity for each supply point (aggregation is

allowed)

2. Submit ECB approval and Register with the MO as a Market Participant; agree

to comply with the Market Rules

the MO will acknowledge that you are registered to participate in the MSB Market

3. CC trading will be monitored on a monthly basis to ensure that CC does not

exceed their Contestable Quantity –

MO

4. ES must nominate their CC for license application and for each transaction –

Generator cannot make license application without indicating a CC as offtaker (LOI)

if CC is not registered, they cannot nominate them on schedule;


MARKET RULES

Qualifying Requirements to Trade – CC (All Tx connected in

Phase 1; incl. with plant behind meter)

5. There are no participation fees

for either EG or CC

6. Contestable Customers shall retain their right to their approved Contestable

Quantity, subject to their remaining connected to the Transmission or

Distribution grid in Namibia

7. Contestable Customers are not obliged to use their approved Contestable

Quantities

any Contestable Customer can de-register as a MP at any time


MARKET RULES

Qualifying Requirements to Trade – CC (All Tx connected in

Phase 1)


MARKET RULES

Qualifying Requirements to Trade – ES (Generator Phase 1a/

Trader Phase 1b/ Importer Phase 2)

1. Apply for Licence; indicate off-take customer type – End customer/ RED/ Export;

LOIs

ECB to Review & Recommend; All tariffs will be approved; Tariffs with REDs will be

set by ECB – Competitive process or RED must demonstrate value

Application forms, criteria and process are on ECB website

2. Register with the MO as a Market Participant incl. agree to comply with the

Market Rules, before commencement of production

the MO will acknowledge that you are registered to participate in the MSB Market

3. Apply for Connection Agreement, Balancing Agreement….etc.

All approvals and agreements required before trading commences

4. Submit Financial Security -

Lodged with MO – see Financial Section of Market Rules for more information


MARKET RULES

Qualifying Requirements to Trade – Exporters

1. Apply for Licence

ECB to Review & Recommend

Application forms, criteria and process are on ECB website

2. Register with the MO as a Market Participant incl. agree to comply with the

Market Rules, before commencement of exports

the MO will acknowledge that you are registered to participate in the MSB

Market

3. Choose between 2 options to facilitate exports

a) Use MSB Office

b) Become SAPP Member


MARKET RULES


1. USE MSB OFFICE:

a) Negotiate with MSB Office to trade energy on your behalf in SAPP

b) Pricing arrangement amendable to both parties – link to SAPP markets

c) Agree point of delivery – at busbar

d) MSB Office responsible for the transport of the power to the border –

no wheeling cost for EP

e) Export license – not necessarily required


MARKET RULES


1. BECOME SAPP MEMBER:

a) Register with MO as Exporter

b) Need to apply and receive SAPP Membership

c) Enter into Balancing arrangements for Exports with MO

d) Agree point of delivery – at border

e) Exporter takes risk for the transport of the power to the border –

wheeling cost for Exporters is still to be determined; several options to

be discussed – less than

f) Export license – is required

MARKET RULES

-

TRADING

1. ES can enter into a Network Capacity Reserve Arrangement with the NO(s) -

Network Reserve Capacity payment will effectively be in exchange for a deemed

energy payment

2. This is for “Financial” Network Rights and not a physical capacity reserve

arrangement

3. In the case of network congestion, the following shall apply:

a) The MO shall have the authority to constrain (up or down) the position of any MP

in order to relieve network congestion;

b) The MO shall follow an approved procedure in deciding which MP(s) to

constrain, but such discretion should take (i) least cost to the total system as

well as (ii) equitable distribution of the constraint between MPs, into account;

c) If a Generator with a Network Capacity Reserve Arrangement is constrained

down, they will receive a deemed energy payment


MARKET RULES

Network Capacity Management

1. The ES (not the CC) shall submit their bilateral trading nominations to the MO for every Delivery Day

2. Forward nomination of bilateral schedules is permitted for the number of trading days defined by the MO , however only nominations for the Delivery Day will be binding.

3. If no nomination is submitted by the ES for the Delivery Day, the MO will view this as if no bilateral transactions have been entered into.

4. The currency of trade is the Namibian Dollar.

5. The SO shall determine the available network capacity.

6. The MO shall allocate the Available Network Capacity between bilateral nominations, taking into account the priority allocation of network capacity

7. The bilateral nominations form shall be completed in full, in order to be valid.

8. Invalid or faulty nominations shall be rejected.

9. In case of rejection, the MO shall inform the relevant ES within the defined time periods


MARKET RULES

Instructions


MARKET RULES

Verification & Adjustments

1. The MO shall confirm receipt of the ES’s bilateral trade nomination submission -via an automated electronic notification

2. The MO shall determine and publish a Constrained Schedule

3. The MO shall inform the relevant ES and CC in the case of a non-compliant submission, including if the approved total Contestable Supply Quantity is exceeded, and shall indicate timelines for resubmission of nominations

1. The MO has the right to adjust (i.e. increase or decrease) any bilateral nominations to ensure system stability and reliability, as well as the protection of people and plant safety, according to the procedure approved by the Regulator.

2. The MO shall take the following into account when adjusting any nominations: People and plant safety; System reliability and security; Allocation of available network capacity; Lowest overall cost.

Verification Adjustment


MARKET RULES

Timelines

No. Activity Timing Responsible

1 Trading DayThe day before

the Delivery DayAll

2 Specify Available Network Capacity Up to 09:00 on

Trading DaySO

3Submission of Bilateral Nominations

for Delivery Day

Up to 10:00 on

Trading DayES

4Submission of Bilateral Nominations

Gate Closure

10:00 on Trading

DayMO

5Confirmation of Receipt of Bilateral

Nominations

Up to 10:00 on

Trading DayMO

6

Verification, matching and

adjustments of Bilateral

Nominations

Up to 11:00 on

Trading DayMO

7 Constrained Schedule publication11:00 on Trading

DayMO

8 Notification of error(s)Up to 11:30 on

Trading DayES

No. Activity TimingResponsibl

e

9Revised Constrained Schedule publication for

Delivery Day

12:00 on

Trading DayMO

10

Dispatch of generators and imports in

accordance with Revised Constrained Schedule,

least cost and technical requirements

Each hour of

the Delivery

Day

SO

11Final Dispatch Schedule publication for Delivery

Day

Delivery Day +

1 day at 10:00MO

12 Metered values for Delivery DayDelivery Day +

1 day at 12:00MO

13

Balancing and Settlement calculations and

publication of results. Publish invoices for

Eligible Generators and Importers

Delivery Day +

1 day at 15:00MO

14 Publish invoices for CCs

As specified in

current supply

conditions

CC

15 Payment of invoices by EGs and Importers

Delivery

Month + 10

days

ES

16 Payment of invoices by CCs

As specified in

current supply

conditions

CC


MARKET RULES

Bilateral Trading Nomination Form (Generator)

Addendum 9: Example of Generator/Importer Schedule Notification

Name of Eligible Seller: [As printed on license from Regulator]

Identification No of ES: __________________________

License Type: [Generator, Trader or Importer]

Delivery Date: [dd-mm-yyyy]

Published Date [dd-mm-yyyy hh:mm]

CC1 ID no.

_________

CC2 ID no.

_________

CC3 ID no.

_________

% of Total % of Total % of Total % of Total

00-01 0.0%

01-02 0.0%

02-03 0.0%

03-04 0.0%

04-05 0.0%

05-06 0.0%

06-07 0.0%

07-08 0.0%

08-09 0.0%

09-10 0.0%

10-11 0.0%

Revision: 1.0

Hour

Contestable Customer(s) Allocation

Total Schedule

(MW)


MARKET RULES

Bilateral Trading Nomination Form (Trader)

Addendum 8: Example of a Bilateral Trading Nomination FormRevision: 1.0

Name of Eligible Seller: [As printed on license from Regulator]

Identification No of ES: __________________________

License Type: [Generator, Trader or Importer]

Delivery Date: [dd-mm-yyyy]

Completed By: [Name of authorised person]

ES1 ID no.

_________

ES2 ID no.

_________

ES3 ID no.

_________

CC1 ID no.

_________

CC2 ID no.

_________

CC3 ID no.

_________

Schedule

(MW)

Schedule

(MW)

Schedule

(MW)

Total

(MW)% of Total % of Total % of Total % of Total

00-01 0.0 0.0%

01-02 0.0 0.0%

02-03 0.0 0.0%

03-04 0.0 0.0%

04-05 0.0 0.0%

05-06 0.0 0.0%

06-07 0.0 0.0%

07-08 0.0 0.0%

08-09 0.0 0.0%

09-10 0.0 0.0%

Contestable Customer(s) AllocationEligible Seller(s) Delivery

Hour

Traders can aggregate, but not consolidate their bids

MARKET RULES

-

BALANCING

BALANCING

Mechanism & Tolerance Band

1. MO will monitor scheduled production against Final Dispatch Schedule

2. A deviation away from scheduled position may attract a balancing payment

3. A tolerance band defined as lesser of:

a) ± 0.5MW, or

b) ± 2.5% of the plants Revised Constrained scheduled production

4. Balancing charge:

a) for negative deviations the charge will be set as a 100% of energy component of Bulk Supply Tariff

b) for positive deviations there will be no charge

5. Balancing payment (plus sale to bilateral customer) to pay for balancing the system

a) Only negative deviations will attract a balancing payment – no compensation for over generation

b) Deviations between the Lower and Upper limits do not attract a balancing payment

c) The bigger the deviation the higher the balancing payment

July 2018 Detailed Market Design Presentation - Workshop 26

Deviation from Dispatch Schedule (MW/h)

0

Balancing Payment

Upper LimitLower Limit


BALANCING

Taking into account (Under Delivery)

27

MO

CusGen10 MW

1 MW

9 MW

MO

CusGen1 MW @ bilateral

tariff

9 MW @ retail tariff9.75 MW @

balancing penalty

PHYSICAL FLOWS FINANCIAL FLOWS

= CONTRACTED ENERGY IN 1 HOUR

= DELIVERED ENERGY FROM ELIGIBLE SELLER

= DELIVERED ENERGY FROM SUPPLIER OF LAST RESORT (MSB)

= PAYMENTS ON ACTUAL ENERGY

= BALANCING PENALTY


BALANCING

Taking into account (Over Delivery)

28

MO

CusGen10 MW

10 MW

MO

CusGen10 MW @ bilateral

tariff

4.75MW @ $0 balancing charge

PHYSICAL FLOWS FINANCIAL FLOWS

= CONTRACTED ENERGY IN 1 HOUR

= DELIVERED ENERGY FROM ELIGIBLE SELLER

= DELIVERED ENERGY FROM SUPPLIER OF LAST RESORT (MSB)

= PAYMENTS ON ACTUAL ENERGY

= BALANCING PENALTY

5 MW


BALANCING

Penalty Mechanism Example

Assumptions:

• A 10MW generator must decide what capacity to declare to the MSB.

• Expected output of the plant is 5MW for a particular hour.

• Potential output can vary between 0 and 10MW - following a typical ‘normal

distribution curve’ profile as shown below.


BALANCING

Penalty Mechanism Example

Assumptions:

• The first figure assumed a balancing charge of 50% of energy component of the bulk supply tariff. Profit maximisation point of 6.7MW suggesting the seller is incentivised to ‘over-declare’ and ‘under-deliver’.

• The figure in the middle assumed a balancing charge of 100%. It shows the profit maximisation point of 5.2MW. The outcome therefore balances risk and rewards.

• The third figure assumed a balancing charge of 200% of the energy component of the BST. It shows that profit maximisation would occur at a Declared availability of 4.6MW which is below the expected output of 5MW. There is therefore an incentive on the seller to ‘under-declare’ and to ‘over deliver’ in order to avoid the steep balancing charge.

MARKET RULES

-

METERING &

SETTLEMENTS


METERING & SETTLEMENTS

Metering

1. Metering in the MSB Market shall be conducted in accordance with the rules and procedures established in the prevailing Transmission Grid Code and Distribution Grid Code.

2. Metering of a CC shall take place at each of the CC’s designated Contestable Supply Points, as approved by the Regulator.

3. The MO shall collect or receive metering data from the metering database, for the purposes of settlements, using the methods described in the Codes.

4. Exporters will be subject to metering at a designated substation inside the borders of Namibia – the designated substation shall be identified and agreed in advance with the MO.

5. Importers will be subject to metering at a designated substation inside the borders of Namibia – the designated substation shall be identified and agreed in advance with the MO.

The MO will also require access to metering data for licensed plant located behind the meter –that are not exempted - and will be subject to balancing, all CCs will be subject to RS, levies etc. on their metered data



Charges

1. The calculation of energy charges, loss charges, balancing charges, reliability

charges, wheeling charges, levies and network use of system charges are subject to

the approval of the Regulator and are summarised in the “Namibia Wheeling

Framework”.

2. Network Capacity Reserve charges shall be set out in an agreement between the EG

or Importer and the relevant NO.



Settlements (EG/ Importers)

1. SO Settlement results shall be based on MPs metered data, the Final Delivery

Schedule data, regulated tariffs and calculations.

2. The SO shall determine settlements for EGs and Importers as follows:

a) Balancing Payment (according to Rules);

b) Losses quantity and payment (in accordance with the Namibia Wheeling

Framework);

c) Customer Service charge (in accordance with the Namibia Wheeling

Framework);

d) Point of Supply charge (in accordance with the Namibia Wheeling Framework).



Settlements (CC/ Exporters)

1. Energy quantity and payment (in accordance with the Namibia Wheeling Framework);

2. Energy Rebates quantity and payment (in accordance with the Namibia Wheeling

Framework);

3. Energy Add-backs quantity and payment (in accordance with the Namibia Wheeling

Framework);

4. Use of System payment (in accordance with the Namibia Wheeling Framework);

5. Losses quantity and payment (in accordance with the Namibia Wheeling Framework);

6. Wheeling Charge (for Exporters) quantity and payment (in accordance with the

Namibia Wheeling Framework);

7. Reliability quantity and payment (in accordance with the Namibia Wheeling

Framework);

8. Customer Service payment (in accordance with the Namibia Wheeling Framework);

9. Point of Supply payment (in accordance with the Namibia Wheeling Framework);

10.Levies quantity and payment (in accordance with the Namibia Wheeling Framework).

MARKET RULES

-

FINANCIAL RULES &

INVOICING



Financial Security (EP/ Importer)

1. Each EP and Importer, as security for the due payment of its imbalanced energy, shall:

a) Deposit a cash collateral, in a securities account nominated by the MO or,

b) Provide the MO with a bank guarantee from a bank of good credit standing

acceptable to the MO.

c) The minimum security required equals the average monthly settlement amount for

the three most recently published settlement reports provided that the security

amount shall never be less than the NAD equivalent of USD 5 000 (five thousand

US Dollars).

d) Exporters shall also comply with the SAPP Markets Financial Rules on Trading

Security Requirements, as appropriate.



Invoicing & Crediting

1. The MO will prepare invoices and credit notes for Eligible Sellers and Exporters at

15:00 on the next Business Day, following Delivery Day (Delivery Day + 1 Day at

15:00).

2. The MO will prepare invoices and credit notes for CCs as per NamPower’s prevailing

supply arrangements.

3. The invoices will be based on the Settlement results and include any relevant

commercial terms.

4. Exporters may also be subject to the Invoicing and Crediting Rules as described in the

SAPP Market Rules.

MARKET PROCESSES &

PROCEDURES

Congestion Management Procedure

Bilateral Nomination Adjustment Procedure

Determination of Balancing Payments for Exporters

Detailed Ancillary Services Assessment

Invoicing Dispute Resolution Process

Energy Banking Service Procedures

CC Registration process and forms

CC Agreement to abide by Market Rules

Amend PSA for CC to allow for Wheeling

Transmission Adequacy Map to demonstrate current capacity avl. for RE integration

LRMC assessment of Tx corridors; to serve as wheeling charge for exports

LRMC for Gx


MARKET PROCEDURES

Procedures Under Development

WHEELING FRAMEWORK

END


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