Progress with market integration:
European initiatives and impact on
FUI
Adeline Lassource (CRE)
Charlotte Ramsay (OFGEM)
10th FUI SG, London, 11th March 2011
• European Council Conclusions, 4th Feb
2011:
• “The internal market should be completed by
2014 so as to allow gas and electricity to flow
freely. This requires in particular that in
cooperation with ACER national regulators
and transmission systems operators step up
their work on market coupling and guidelines
and on network codes applicable across
European networks”.
FUI SG, London, 11th of March 2011
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Progress to date …
• CWE market coupling
• TLC  CWE coupling
• ITVC between CWE & Nordic regions)
• “AHAG” – stakeholder group
• Implementation projects and roadmap …
• North West Europe TSO projects
• Day ahead & Intraday coupling
• Price Coupling of Regions (PCR)
• PX initiative (NWE region + Spain & Italy)
FUI SG, London, 11th of March 2011
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Framework Guidelines and
Network Codes
• Technical and Market based Codes
• Legally binding rules covering issues relevant to
cross border trade and related system operation
• Framework Guidelines: Set high level principles for
the code (Regulators)
• Network Codes: Necessary steps to implement FG
(TSOs)
• Market integration codes:
• Capacity Allocation and Congestion Management
(CACM) – in progress
• Balancing – FG drafting begins Summer 2011
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Context: CACM Framework
Guideline
•
Following the adoption of the Third Energy Package, the
Commission invited ERGEG to draft a FG on Capacity Allocation
and Congestion Management (CACM)
A specific project team was created inside ERGEG ENM TF to
draft the Initial Impact Assessment (IIA) and the draft Framework
Guideline (FG)
•
•
•
•
A workshop was organised on 18 October 2010
The public consultation on the ERGEG draft FG was closed on 10
November 2010
After the entering into force of the Third Energy Package (3rd
March 2011), the Agency shall submit within maximum six
months a non-binding framework guideline for cross-border
network issues and market integration issues
FUI SG, London, 11th of March 2011
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Context: CACM Network Code
• EU Regulation requires an increased cooperation and
coordination among TSOs to create network codes for providing
and managing effective and transparent access to the
transmission networks across borders
• Network codes shall be in line with Framework Guidelines
• As soon as the FG on CACM will be finalised, ENTSO-E has 12
months to submit to the agency the Network Codes
 to be implemented by 2013
• In order to involve all stakeholders during the drafting of the
Network codes, ENTSO-E envisages a group similar to AHAG
led by ENTSO-E to support the development of the network
codes. This group will follow all the codes to ensure consistency
in the approaches of the codes
FUI SG, London, 11th of March 2011
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CACM: The Target Model
•
The FG covers most of current Congestion Management
Guidelines content (except Transparency which is covered
separately)
•
Scope and level of detail goes beyond the CM
Guidelines, reflecting experiences since 2006
•
The FG provides an answer to these issues:
• Capacity Calculation
• Delimitation of Zones
• Day-ahead Market
• Forward Market
• Intra-day Market
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CACM Target Model (1/3)
• Capacity Calculation:
• TSOs define and implement either Flow-Based (in
meshed grids) or ATC method
• Zone delimitation:
• Definition: a zone corresponds to a bidding area,
• Objective: overall market efficiency, taking into
account network topology and contributing to correct
price signals
• Process: proposed by TSOs, reviewed by NRAs after
market consultation
FUI SG, London, 11th of March 2011
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CACM Target Model (2/3)
• Capacity allocation methods for the day-ahead market:
• TSOs, in cooperation with PXs, implement capacity allocation on
the basis of implicit auctions via a single price coupling algorithm
which determines at the same time the volumes and prices in all
relevant zones
• Capacity allocation methods for the forward market:
• the options for enabling risk hedging for cross-border trading are
Financial Transmission Rights (FTR) or Physical Transmission
Rights (PTR) with UIOSI (Use-It-Or-Sell-It)
• unless appropriate cross-border financial hedging instruments are
offered in liquid financial markets.
FUI SG, London, 11th of March 2011
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CACM Target Model (3/3)
• Capacity allocation methods for the intraday market:
• Continuous implicit trading, including reliable pricing of
capacity reflecting congestion (i.e. in case of scarce capacity),
automatic matching, appropriate block bids and sophisticated
products where needed;
• A pan-European capacity management module (CMM) allocating
continuously capacity. Once allocated, capacity is firm. Where
applicable, until the full implementation of the provisions of these
Framework Guidelines in the CACM Network Code(s), the CMM
may provide direct access for bilateral supply (OTC) contracts
to the capacity.
• A shared order book function provided with the bids submitted by
all participating PXs and intraday platforms and real-time
information on available transmission capacity.
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How to reach target model
in the FUI?
• Focus on day-ahead
• Work is needed between TSOs and PXs to implement a proper
market coupling between the FUI region and the CWE region
• Long term:
• Compatibility of the platforms for anonymous secondary trading at
least at regional level
• General requirements and provisions also clarify other
issues for the FUI region:
• Clear framework for firmness before and after nominations of LT
capacities except in case of force majeure. Physical firmness is the
preferred approach
• Physical firmness for DA trades even in case of force majeure
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Thank you for your attention!
www.energy-regulators.eu
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