Electricity Regional Initiative
Central-South Europe Region
4th Stakeholder Group meeting
European Federation of Energy Traders
The Central South Region and
the European target model
How to ensure consistency
Riccardo.rossi@eon.com
1
Context: the EU target model
New price
Zones ?
Flow based DA
Allocation ?
firm XB transmission rights
Forward transmission rights
Day-ahead
price coupling
unbundling and
regulated TPA
continuous XB
intraday markets
self dispatch
The Central South Region and the European target model
market driven
end-user prices
Paris, May 31st, 2010
Harmonised
balancing rules
H-1 gate
closure
market driven
investments
2
Cross border aspects of the EU target model
 Firm forward transmission rights allocated by TSOs
 Day ahead implicit market coupling (price coupling)
 Continuous intraday allocation thanks to one unique SOB,
interim model with OTC capability
 Cross border procurement of balancing energy and
reserve capacity
 Focus on the Italian electricity market in the CS Region
The Central South Region and the European target model
Paris, May 31st, 2010
3
Main features of the Italian Electricity Market
Forward
Market
• financial forward market
• forward PTRs
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“Mandatory” Power Exchange – GME i.e. bilateral deals to be submitted to GME
Market Coupling with Slovenia - explicit allocation of the XB capacity with other neighboring countries
National Market based on Market Splitting – Italian market divided in 6 bidding zones
Nodal bidding i.e. balancing circle=generation unit
Asymmetric price: Selling price= Zonal Prices VS Buy price=Unique National Price (PUN)
Settlement in m+2
Hourly products/No block bids
Intraday
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Mandatory Power Exchange - GME
Only national market; cross border ID
4 auctions (“MI”), two in day D-1 and two in day D
Nodal bidding
OTC not possible
Hourly products/No block bids
Balancing
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Balancing and Redispatch altogether
Market based solution
Price steps constraints
Nodal bidding i.e. each generation unit
“Pay as Bid”
Several sessions, starting already in the D-1
Day Ahead
The Central South Region and the European target model
Paris, May 31st, 2010
4
Building blocks for the CS Region integration
Forward Market
Current arrangements
 PTRs available on all borders
 Availability of instruments (CCC) to manage price risk of the
fee for Assignment of Rights of Use of Transmission Capacity
(CCT)
Forward
Market
Main measures needed
 Integration with CASC started in 2011, but full integration on
rules needed (e.g. firmness and compensation)
The Central South Region and the European target model
Paris, May 31st, 2010
5
Building blocks for the CS Region integration
Day Ahead
Main measures needed
Day
Ahead
 Ensure a consistent set of traded products and order format
are available to market participants
 Ensure that the price zones are relevant both for supply and
demand
 Introduce portfolio bidding (i.e. per bidding area)
 Remove any mandatory requirements to participate in dayahead market
 Coupling with remaining neighbouring countries, including
shift of gate closures
 Standardize the payment period
The Central South Region and the European target model
Paris, May 31st, 2010
6
Building blocks for the CS Region integration
Intraday
Main measures needed
Intraday
 Introduce continuous intraday trading with a continuous
OTC market for the national market and together with
neighboring countries
 Progressively move to H-1 gate closure for nominations
(i.e. 1 hour neutralisation lead-time)
 Introduce portfolio bidding (i.e. per bidding area)
 Establish SOB platform for intraday orders with explicit
access: develop implicit allocation for intraday markets with
progressive pooling of XB liquidity
The Central South Region and the European target model
Paris, May 31st, 2010
7
Consultation for ID X-Border capacity allocation
EFET main remarks
 Auctions possible only as interim solution, need for a roadmap to
fully implement the target model.
 Need to enable bilateral trading using X-Border capacity (Current nomination
deadline for OTC is at d-2.)
 All 24hrs must be covered by X-Border Intraday Auctions “XBIDs”
 XBID1 to be held later in the afternoon i.e. > 4pm D-1
 More XBID sessions, closer to hour of delivery
 Need for UIOSI principle for allocated capacity
 Fall back solution needed
 Longer bidding window (>15mins)
 A solution has to be found also for the Italian and Greek border
The Central South Region and the European target model
Paris, May 31st, 2010
8
Building blocks for the CS Region integration
Balancing
Main measures needed
Balancing
 Purchase of electricity for balancing and redispatch after
the gate closure of Intraday market (target: H-1)
 Remove price bidding limitations
 Separate the procurement of electricity for balancing and
redispatch purposes
The Central South Region and the European target model
Paris, May 31st, 2010
9
Other desirable features to be harmonised
 TSO providing full transparency on its activities in the markets
 Increased operational TSOs cooperation on capacity calculation,
system management in real time and before real time
 Generation capacity owned only by market participants  TSOs
should not be allowed to own generation/storage assets
 Solving market distortions that could cause the need for Capacity
Remuneration Mechanisms
 All market participants, also RES producers, shall be responsible
of balancing their own position
 ...
The Central South Region and the European target model
Paris, May 31st, 2010
10
The Central South Region and the European target model
Paris, May 31st, 2010
11