eu integrated electricity market seminar · from 34 countries •532 million ... nordic markets nov...
TRANSCRIPT
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EU Integrated Electricity Market seminar
The implications for the Single Electricity Market
Sponsored by
Thursday 1st September Chartered Accountants House, Dublin
www.energyireland.ie
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The practicalities of implementing an
effective and efficient European
Electricity Market
Mark Copley
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Overview
• About ENTSO-E
• The vision – a single market by 2014
• The current state of play
• Ongoing work
• Regional Market Integration
• Developing Network codes
• Challenges ahead
• Concluding remarks
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The European Network of Transmission System Operators for Electricity
• ENTSO-E Represents 41 TSOs
from 34 countries
• 532 million citizens served
• 880 GW net generation
• 305,000 Km of transition lines managed by the TSOs
• 3,200 TWh/year demand
• 380 TWh/year exchanges
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The Vision
It is our priority to remove all barriers to the internal energy market so that energy can flow freely everywhere in the EU. The single European energy market must become a reality for all businesses and consumers by 2014.
Commissioner Oettinger
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Creating a European market
IEM
An efficient pan-European
market
Robust interconnected
networks
A focus on the future (R&D
and innovation)
Clear & consistent
rules
Smart & efficiently operated networks
Transparency
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Forward Market Physical Market
Futures Y+n
Y +1
Monthly Day-ahead
Implicit auctions
Market coupling
Intraday
Implicit
continuous
trading
Real time
Bala
ncin
g
Coordinated ATC
Flow based where more efficient NTC or Flow based
A Common Market Model in .. 2014
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Central West &
Nordic markets
Nov 2010
Central South
market South West
market
UK-NL cable April 2011
Baltic market
Progressively built from very different starting points
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Supported via legally binding, robust network codes
Markets
Capacity Allocation & Congestion
Management code
Network Code on balancing
System Development
Network code on generator connection
Network code on DSO &
industrial load connection
System Operations
Network code on operational
security
Network code on operational
planning & scheduling
Network code on load
frequency control & reserves
Legally binding network codes are:
– A means to deliver the Target
model.
– An opportunity to clarify and
harmonise connection rules.
– A basis for ongoing
coordinated system operation.
An important process which
we need parties to engage in.
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Developed, consulted on and becoming law within tight timescales
Comitology Process (where appropriate)
EC In consultation with all stakeholders resulting in legally binding NC
Assessment of NC
ACER Recommendation of NC to EC
Period in which ENTSO-E can develop a NC (12 month period)
ENTSO-E In consultation with stakeholders according to FWGL
Request for ENTSO-E to draft a network code
EC According to FWGL submitted by ACER
Development of the FWGL (6 month period)
ACER (ERGEG) In consultation with ENTSO-E, stakeholders, with input from Ad-Hoc
Expert Group
Request to draft a FWGL
EC On a topic identified in art.8 (6) of Regulation EC 714/2009
Development of
FWGL
Development of
NC
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Challenges for ENTSO-E
Expanding existing projects
• Developing day-ahead coupling
• Trialing intra-day designs
• Progressively expanding coverage
Creating network codes
• Which clearly explain rules
• Are developed with stakeholder buy-in
• And strike the right balance with national law.
Focusing on forwards and balancing
• Developing rules for long term markets
• Effective cross border balancing
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Concluding Remarks
• ENTSO-E has a significant role to play in creating a European market.
• Our activities will influence all stakeholders in all parts of Europe.
• Delivering a competitive internal energy market in 2014 is a significant challenge.
• Which will only be achieved with the assistance of and engagement with all stakeholders.
• Hence, we welcome views and urge you to get involved.
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Thank you for your attention, any questions
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The FUI regional market initiative: Project overview
Olaf Islei
Senior Manager, European Strategy
Ofgem
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15
Agenda
• Regional initiatives – shifting landscape
• Completing the internal electricity market
• FUI region draft workplan 2011-2014
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16
The Third Package
Unbundling Regulators EU Agency Network Codes Consumers
Why? Separation of Networks How? Ownership Deep ISO Third Way
Why? Level playing field How? Independence Powers to investigate non- compliance & impose sanctions X-border duties
Why? EU-level regulatory gap How? Advisory body on x-border issues
Why? Coordinate network operation and development How? TSOs to develop Agency oversight Comitology
Why? Put consumers at the heart of Liberalisation How? Further measures at EU level
A cross-border regulatory framework by 2014
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17
Regulation of cross-border trade
• Cross-border duties
• ACER
• ENTSO-E
• Network codes
• Target models for cross-border trade
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18
Common challenges
Sustainability
Competition
Security of supply
Internal Energy Market
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19
Increased wind and interconnection
Excluding Norway
38 GW 77 GW 112GW
13% 20% 26%
5 GW 8 GW 11 GW
8% 11% 15%
8 GW 29 GW 39 GW
8% 24% 30%
Existing
Construction
Planned
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20
CURRENT STATUS
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21
Regional Initiatives Structure
ACER – overall coordination
FUI Regional Initiative
Regional coordination
Regional coordination committee
Regulators and Ministries
Implementation Group
Regulators and TSOs
Stakeholder Group
Regulators, Ministries, Cion, TSOs, PXs,
Generators, Suppliers
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22
Completing the internal electricity market
• February 2011 - Energy Summit of the European Council
– The internal market should be completed by 2014
• July 2011 – ACER adopts FG on Capacity Allocation and Congestion Management (CACM FG)
– Core elements of European target model for cross-border trade
• September 2011 – detailed ACER roadmap to implement target models by 2014
• September 2012 – ENTSO-E finish CACM Network Codes
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23
CACM FG target models
Long-term hedging
Day-ahead implicit auctions
Intraday continuous
trading
Cross-border
balancing
Zone delineation
Capacity calculation
Focus of ACER roadmaps – Regional and Pan-European (i.e. 2014 target)
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24
Regional evolution
Day-ahead market coupling
FUI region
Intraday trading
Long-term auctions
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25
The European layer
Common cross-border arrangements
Diverse national arrangements
Interaction between the two should encourage harmonisation
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26
FUI Region draft workplan
• Q4 2011 – select GB hub
• Q2 2012 – market coupling over IFA
• Q4 2012 – North-West European price coupling
GB-NWE day ahead
• Q4 2012 – NWE intraday interim solution
• Q4 2014 – NWE intraday target model
GB-NWE intraday
• Q2 2012 – Develop options for market coupling
• Q4 2012 – SEM regulators decide preferred option
• 2014-16 – implement target model
GB-SEM day-ahead
• Q3 2011 – TSOs implement quick wins
• Q4 2011 – NRAs develop detailed roadmap
• Q3 2013 – Implement target model
FUI LT auction coordination
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27
Conclusion
• The European target models explained in the ACER Framework Guideline
• Regional and European roadmaps to achieve the 2014 target date on the ACER website
http://www.acer.europa.eu
• An estimation of the cost of implementing CWE market coupling and EMCC is approximately €36 million
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EU Integrated Electricity Market
The Market Operator’s perspective on the
new market arrangements
David Stevens
Manager, SEMO Market Development
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3 GOVERNMENTS – IE, NI & UK 2 SYSTEM OPERATORS
2 REGULATORY AUTHORITIES
1 SINGLE ELECTRICITY MARKET
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Playing field is considerably bigger now…
…however, benefits of enhanced trading
arrangements are considerable.
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Why couple? An integrated marketplace
promotes greater competition.
… for the benefit to all consumers across the EU.
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The UK is reviewing energy policy to ensure
security of supply of low carbon generation
…we need to be mindful of this when
considering coupling options.
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Achieving SEM required the highest amount of
coordination and cooperation
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Capacity Allocation and
Congestion Management
Framework Guidelines states
that Price Coupling is the
preferred model
Achieving SEM required the highest amount of
coordination and cooperation
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Full compliance by 2016
Evolution options for 2014
Establish Market Integration
Project under the RA
Heavy Transitional options
Evolution of the SEM to 2016 with full
compliance
Light Transitional options
Develop new market arrangements for 2016
Options for consideration
• Integrate a Day Ahead price
• Integrate SEM into NWE
• Price coupling with GB market
• Outside SEM CfD market
Decision on which path to be made in
Feb 2012
The Evolution of SEM - Workplan
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Intraday Trading (IDT) is part of
the bigger picture and is an
important step
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The Evolution of SEM - Workplan
GB-SEM Border Responsible Deadline
Implement Intraday trading on
SEM-GB interconnectors
PXs/TSOs/FUI/Regulators
Mid 2012
Develop options to deliver
CACM FG target model, a
consultative process
TSOs/MO End 2012
INTRA DAY TRADING (IDT)
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SEM with IDT and Target Model
Stage Long Term Day Ahead Intra-day Balancing Settlement
SEM Renewables and Legacy Contracts
Indicative Price and Quantities
Physical IC Nominations
Implicit Auctions
SO-SO Trades Imperfections
Local
Target Model
Bilateral and Nominations
Single Price Coupling
Continuous Implicit
Balancing TBC Local
Gap No Physical
Nominations for Price Makers
No Firm Day Ahead Price
and Quantities Not Continuous TBC OK
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Market Operators Perspective
Aligning SEM with the Target Model will be challenging from an implementation
perspective; however, there may be many ways in which we can achieve this.
Cost. Accuracy. Timeliness.
-Cost of options needs to be weighed against benefits.
-Accuracy: options need to comply with Network Codes.
-Timeliness: transitional arrangements “may” be in place by
2014 and do not extend beyond 2016 for full TM compliance.
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This is the beginning of a
process that will see the SEM
evolve through 2014-2016
We are eager to fully understand Industry Stakeholders perspective
Initial opportunities will occur:
- Today
- Bilateral meetings in CER offices on 8th Sept 2011
- Bilateral meetings in NIAUR offices on 9th Sept 2011
- Further engagement in Oct 2011
- In response to RA consultation in Jan 2012
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Implicit Intraday Auctions
-O-
Day Ahead Price Coupling
-OO-
Forward Capacity Allocation
-OOO-
Implicit Continuous Intraday
All components of the menu need to be
complimentary …
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Interconnectors in the new market arrangements
Paul McGuckin
1 September 2011
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• Role of interconnectors
• Current and future capacity allocation
• Target model
• Coupling in SEM
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Role of interconnectors
• Physical link between two markets
• Allows traders to sell power (generally) from higher priced market to lower priced market
• Interconnector owner typically allocates interconnector capacity through explicit auctions – All of these statements hold true under new arrangements
• Framework guidelines envisage implicit capacity allocation – Interconnector owners can’t do this in isolation
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Role of interconnectors
• Physical link between two markets
• Allows traders to sell power (generally) from higher priced market to lower priced market
• Interconnector owner typically allocates interconnector capacity through explicit auctions – All of these statements hold true under new arrangements
• Framework guidelines envisage implicit allocation – Interconnector owners can’t do this in isolation
Market arrangements are key
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Moyle current explicit auctions
Annual
Seasonal Seasonal
Quarterly Quarterly Quarterly Quarterly
Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly
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Near future developments
Annual
Seasonal Seasonal
Quarterly Quarterly Quarterly Quarterly
Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly
Daily auctions (before SEM gate closure)
UIOSI
Implicit intra day allocations (post SEM gate closure)
UIOSI/ UIOLI
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Target model
• Upcoming SEM developments are a significant move toward European compliance but still leave SEM short of CACM FG
• Key change for interconnectors in how capacity is allocated
• SEM intra-day modification involves implicit allocations but this is very different to both continuous intra-day trading and implicit day-ahead market coupling
• SEM evolution (or revolution?) required – Needs to be compatible with neighbouring market
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SEM requirements for coupling
• Day-ahead prices – Coupling takes place at day-ahead stage
– SEM is ex-post market so currently no day-ahead price
• SEM power exchange involvement – Power exchange algorithm takes all bids/offers and allocates capacity
in most efficient manner
– Liquidity
• Firm capacity – Party providing firmness must be able to deliver
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Impact of coupling
• Most efficient allocation of capacity at day-ahead – More “participants” in SEM
– Capacity allocated to lowest prices
• Interconnector flows should be maximised – Moyle load factor 70-90% within past year
• Should see some price convergence
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Optimum interconnection
• Integrated market requires/envisages significant new interconnection
• Price convergence reduces value of interconnector – Diminishing returns versus significant build cost
• Probable cost recovery through TUoS
• Consumer benefit must outweigh cost
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Summary • Substantial progress being made towards alignment with
European requirements
• Still lots of work required to make SEM compatible with CACM FG
• Interconnectors can help deliver benefits for consumers if market arrangements are appropriate
• Need to consider optimum level of interconnection
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Integration of the Spanish electricity market into the new European market
ESTER PEREGRINA Market Advisor REE
EU INTEGRATED ELECTRICITY MARKET SEMINAR Dublin, Thursday 1 September 2011
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1. The Spanish Electrical system
2. The MIBEL market
3. Integration of MIBEL into the IEM
4. Transparency and information management
5. Conclusions
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REE as Spanish Transmission System Operator
REE established in 1985 as the first company in the world
exclusively dedicated to transmission and system operation
Footprint: Spanish mainland, Canary and Balearic Islands,
Ceuta and Melilla
Assets: nearly 39,000km of HV transmission lines, 4,600
busbar connections and 73,000 MVA of transformer capacity
Control Centres: two for System Operation and one for
Renewables
Share capital: 80% free float, rest public
Peak of demand in Spain
17/12/2007 45.450 MW
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Generation mix and installed capacity in Spain May 2011
Technology MW %
Hydro-power 16.657 17,4
Nuclear 7.455 7,8
Coal 10.789 11,3
Fuel-Gas 1.849 1,9
Combined cycles 24.720 25,8
Total (ordinary regime) 61.470 64,0
Wind power
generation 20.243 21,1
Solar PV 3.734 3,9
Solar CSP 780 0,8
Biomass 684 0,7
Special regime hydro 1.965 2,0
Cogeneration 5.946 6,2
Waste treatment 1.204 1,3
Total (special regime) 34.556 36,0
Total 96.026
Hydro17,3%
Nuclear7,8%
Coal
11,2%
Fuel-Gas1,9%
Combined cycle
25,7%
Wind
21,1%
Solar PV3,9%
Solar CSP0,8%
Mini-hydro
2,0%
Biomass0,7%
Cogeneration6,2%
Waste Treat.1,3%
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Evolution of installed capacity in the Spanish System
183 428798
1.5252.298
3.442
4.927
6.138
8.304
9.653
11.099
13.908
15.873
18.390
19.976
20.243
0
2.000
4.000
6.000
8.000
10.000
12.000
14.000
16.000
18.000
20.000
22.000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
MW
Installed Wind power generation evolution 1996-2011
Foreseen evolution of the generation mix
0
5000
10000
15000
20000
25000
30000
35000Hydro
Nuclear
CCGT
Other thermal
Wind
Solar
Other Special Regime
1998
2008
20164 7 11 22
46139
666
32523266
3602
3734
0
500
1000
1500
2000
2500
3000
3500
4000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011(*)
MW
Installed solar photovoltaic power generation evolution 2006-2011
0 11 11
231
630
780
0
100
200
300
400
500
600
700
800
900
2006 2007 2008 2009 2010 2011(*)
MW
Installed solar thermoelectric power generation evolution 2006-2011
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Spanish electrical system organization
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Variety of generation technologies
o Energy mix more intermittent and less manageable
Insufficient cross-border capacity of the Iberian
peninsula
Spanish load demand:
o Depending on:
Meteorology
Labour-day/Holiday
Week day
Year time
o Still increasing and continuously changing
CECRE (REE Control Centre for Renewable) and
RESCC (companies’) facilitate the integration of
special regime generation and in particular RES in
the System Operation
System Operation challenges
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1. The Spanish Electrical system
2. The MIBEL market
3. Integration of MIBEL into the IEM
4. Transparency and information management
5. Conclusions
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Since July 2007, MIBEL is a single electricity market between Spain and Portugal that manages
day ahead and intraday markets:
o One Power Exchange (OMIE), one Derivatives Exchange (OMIP), two TSOs (REE & REN)
and a single Council of Regulators
o Market Splitting if congestion occurs at Portuguese-Spanish border two price zones
o 79% of the hours with single price in the DA market (average value in 2010)
MIBEL: 4 years of Iberian market
Increase of hours without congestion
Convergence in prices
(*) Balance in 2010
6 Mill. Consumers
52,2 TWh
9,1 GW
28 Mill. Consumers
Demand 2010: 275,2 TWh
Peak of Demand 2010: 44,9 GW
1.523
GWh* 2.632
GWh*
3.905
GWh*
PTES
264
GWh*
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The MIBEL in Europe
Regional Markets coupled in DA
Nordic countries+ Estonia Market splitting
CWE Price coupling
EMCC Tight Volume coupling
MIBEL Market splitting
Czech Rep.+ Slovakia Price coupling
Italy + Slovenia Market splitting (several price zones)
2011 outlook of regional markets coupled in the day-ahead timeframe
Import exchange capacity vs. Installed generation capacity (%)
Source: EU-Directorate General for Energy and Transport
10% target (national) fixed by the EU
Need to increase the NTC in the
France-Spain interconnection (interconnection MIBEL – rest of Europe)
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Interconnection development within MIBEL NTC Evolution 2014-2015
CARTELLE
LINDOSO
FALAGUEIRA
CEDILLO
BROVALES ALQUEVA
SAUCELLE
ALDEADAVILA
POCINHO
BEMPOSTA
TAVIRA
PUEBLA DE GUZMAN
GUILLENA
O COVELO
VILA FRIA LAGOACA
ALDEADAVILA
BOBORAS
2015
ARKALE
ARGIA
HERNANI
PRAGNERES
BIESCAS
BAIXAS
VIC
BESCANO
RAMIS
STA.LLOGAIA
2014
3000
3000 “the connection and evacuation of renewable sources,
mainly wind, hydro and solar in the Iberian Peninsula, is
one of the most important investment needs in the
South-Western and Center-South region of Europe”
2010 TYNDP
Midterm (2014 - 2015) investments in SWE
region up to 6-7 bn€ according to TYNDP
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1. The Spanish Electrical system
2. The MIBEL market
3. Integration of MIBEL into the IEM
4. Transparency and information management
5. Conclusions
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Congestion management mechanisms within MIBEL
Current situation
Long term
(Y-1, M-1)
Day-ahead (D-1)
Intraday
(D-1, D)
Balancing
(D)
PTR Explicit auctions (REE-RTE)
PTR Explicit auctions (RTE)
2 PTR Explicit auctions (REE)
No XB mechanism yet
Market Splitting
CfDs ESPT (OMIE) *
6 Implicit auctions
No XB mechanism yet
Portugal-Spain (IPE) France-Spain (IFE)
* 50% NTC
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Implementation of the IEM target model in the SWE region 2014 outlook
Long term
(Y-1, M-1)
Day Ahead(D-1)
Intraday
(D-1, D)
Balancing
(D)
Cross-border balancing exchanges among TSOs **
Price coupling MIBEL–NWE *
Continuous trading + Implicit auctions *
PTR/FTR Explicit auctions in a supraregional platform *
Long term
(Y-1, M-1)
Day-ahead (D-1)
Intraday
(D-1, D)
Balancing
(D)
IPE & IFE
Target Model
Intraday
AllocationImplicit
Continuos
Trading and/or
Implicit Auction
Day-Ahead
Implicit
AllocationPrice Coupling
Monthly
Y+1
Futures on Y+1
Explicit Auctions
Physical and/or
Financial
Transmission
Rights
Harmonised GCT
Coordination of
ATCs (Flow
Based and/or
NTC)
Flow
Based where
more efficient
Bala
ncin
g, R
eal
Tim
e
Flow
Based where
more efficient
„Physical“ market„Forward“ market
PCG
ACER FWGL on CACM *
Future Balancing Guidelines **
NCs
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Ongoing projects:
o IFE: RTE and REE are working for the transfer of
the long-term auctions (yearly and monthly) on the
French-Spanish border to a common cross-
regional/european platform
o IPE: A coordinated mechanism is still pending.
Whether the final product is PTR/FTR and can be
auctioned by a European platform is subject to a
coming regulatory decision
CfDs ESPT (OMIE) (IPE)
PTR/FTR Explicit auctions in a
regional/european platform,
searching for European
coordination
Implementation of the IEM target model in the SWE region Harmonization of long-term mechanisms
PTR Explicit auctions (IFE)
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MIBEL is willing to coupling NWE (mid-2013 is
foreseen in AESAG roadmaps):
o TSOs and OMIE have the compromise of changing
the MIBEL DA GCT to 12:00h CET by mid 2012
o Implementation of PCR algorithm in MIBEL is
foreseen by mid 2012 too
o Collaboration between SWE and NWE regions for
the preparation of governance arrangements will
be needed to couple both regions
o IFE Explicit daily auction to disappear
Market Splitting (IPE)
Daily PTR Explicit auctions (IFE)
Price coupling MIBEL-NWE
Implementation of the IEM target model in the SWE region Market coupling MIBEL-NWE
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6 Implicit auctions (IPE)
2 PTRs Explicit auctions (IFE)
Continuous trading + Implicit
auctions
Implementation of the IEM target model in the SWE region Intraday
A consensus on the implementation of FWGL on
CACM target model on ID is still pending on SWE
region (compatibility of –existing- implicit
auctions and continuous trading under study)
Next steps:
o IFE: Replacement of 2 ID Explicit auctions by
implicit continuous allocation through the pan-
European intraday platform
o IPE: Access to the continuous EU platform should
be granted
o MIBEL: Compatibility of continuous trading and
implicit auctions as a second layer has to be
guaranteed
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Implementation of the IEM target model in the SWE region Cross-border balancing
On top of national balancing markets, the three
TSOs of the region (RTE, REE and REN) are
working for the implementation of cross-border
balancing exchanges among TSOs
A two-step approach is foreseen:
o Interim bilateral solutions RTE-REE and REE-REN:
The implementation work of both interim solutions
is coordinated (common work plan, same legal and
operational structure) and the target date is Q3
2012
o Enduring solution: RTE, REE and REN are
analyzing the design of a multi-TSO enduring
solution within SWE region, extendable to other
regions in Europe, to be implemented in a second
step once the regulation on balancing (FWGL & NC)
is in place
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1. The Spanish Electrical system
2. The MIBEL market
3. Integration of MIBEL into the IEM
4. Transparency and information management
5. Conclusions
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The Comitology Guidelines on Fundamental Electricity Data Transparency
(still under public consultation) will establish the framework for open
publication of electricity data referred to Load, Transmission Network,
Generation and Balancing
Entsoe.net will be the common transparency platform where the detailed
information will be published according to the Guidelines on FEDT
Already existing regional or local platforms will continue publishing the
same or more information
Next developments regarding Transparency
Source: www.entsoe.net
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REE supports the maximum level of transparency and it is recognized in
Europe for its high degree of transparency (2008 ERGEG Transparency Report)
High transparency standards, according to Spanish Regulation (Operational
Procedure 9), are already published in our public website www.esios.ree.es
Transparency in REE
Source: esios.ree.es/web-publica
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1. The Spanish Electrical system
2. The MIBEL market
3. Integration of MIBEL into the IEM
4. Transparency and information management
5. Conclusions
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The creation of the IEM is a challenging process that requires from the collaboration
of all the parties (Regulatory Bodies, TSOs, PXs and MPs) and regions involved and
needs clear regulatory guidance
REE has a wide experience in Market Integration (MIBEL) and has a leading role in
Europe integrating renewable energy in the Operational System.
It is of the utmost importance to count on robust meshed interconnected network.
For that purpose, Spanish Electrical System has an ambitious network development
plan for the coming years and is reinforcing the links with neighbouring countries
From the perspective of an outlying country like Spain, it is of the utmost
importance to be active both in the elaboration of the EU regulation (FWGLs & NCs)
and central European projects monitoring and collaboration
From the IEM creation process perspective, REE is actively working in close
collaboration with neighbouring TSOs towards the harmonization of LT mechanisms
in the region and their integration into regional/european platforms, facilitating the
market coupling MIBEL-NWE, following the implementation of ID solutions and
developing cross-border balancing mechanism among TSOs.
In the coming years the continuous need of integration and control of renewable
(20-20-20 objectives) and demand management (flexible consumers, smart grids,
electric cars, pumping…) will become more challenging issues
Conclusions
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EU Integrated Electricity Market seminar
The implications for the Single Electricity Market
Sponsored by
Thursday 1st September Chartered Accountants House, Dublin
www.energyireland.ie