SEE Wholesale Market Opening

SEE Regional Market Design

November 26th 2009

Athens Forum

SEE Wholesale Market opening

Agenda

1. Introduction
2. Main recommendations
3. Transitional phase
4. National Action Plans

SEE Wholesale Market opening

Main recommendations by the Consultant

Wholesale Market Opening in the region requires a regional solution

Regional solution is based on a de-centralized regional market design

Implementation with national control and regional cooperation

Each national market developed in parallel with the regional market

No separate national competitive wholesale markets

No break-up of national incumbents

Align development of SEE markets with mainstream European trends

Use of implicit auctions in close cooperation with the CAO
Full competition between OTC/Exchange/Bilateral

Improve bilateral trading practices standardization of contracts - transparency

SEE Wholesale Market opening

National markets too small

Energy Generation SEE and Nordic (TWh 2008)

200

150
Other
Thermal

100

Nuclear
Hydro

50

0
SEE

Competition in generation obtained via a regional solution

Denmark

Finland

Norway

Sweden

SEE Wholesale Market opening

Main recommendations by the Consultant

Wholesale Market Opening in the region requires a regional solution

Regional solution is based on a de-centralized regional market design

Implementation with national control and regional cooperation

Each national market developed in parallel with the regional market

No separate national competitive wholesale markets

No break-up of national incumbents

Align development of SEE markets with mainstream European trends

Use of implicit auctions in close cooperation with the CAO
Full competition between OTC/Exchange/Bilateral

Improve bilateral trading practices standardization of contracts - transparency

National Market Operator 1

Market Participants
Bidding

Bids

Connection flexibility

Bidding process

National control
regional cooperation

NEC NM1

Create NEC

2
Results/Settlement

Scheduling

Results

Prices all areas

Flow all ICs

Regional Price Calculation

Market Participants
Bidding

Bids

Create NEC

2
Results/Settlement

NEC NM2

Scheduling

Results

NEC
NM1

SEE Service provider

Bidding process

+ ATCall

+
NEC
NM2

National Market Operator n

Prices all areas

Flow all ICs

CAO

ATCall

1 ATCall ICs

3
Flowall ICs

Calculation of TC
for all
interconnections

SEE Wholesale Market opening

Main recommendations by the Consultant

Wholesale Market Opening in the region requires a regional solution

Regional solution is based on a de-centralized regional market design

Implementation with national control and regional cooperation

Each national market developed in parallel with the regional market

No separate national competitive wholesale markets

No break-up of national incumbents

Align development of SEE markets with mainstream European trends

Use of implicit auctions in close cooperation with the CAO
Full competition between OTC/Exchange/Bilateral

Improve bilateral trading practices standardization of contracts - transparency

SEE Wholesale Market opening

National champions can survive (and grow)

Reference to Vattenfalls annual report 2008

8

SEE Wholesale Market opening

Main recommendations by the Consultant

Wholesale Market Opening in the region requires a regional solution

Regional solution is based on a de-centralized regional market design

Implementation with national control and regional cooperation

Each national market developed in parallel with the regional market

No separate national competitive wholesale markets

No break-up of national incumbents

Align development of SEE markets with mainstream European trends

Use of implicit auctions in close cooperation with the CAO
Full competition between OTC/Exchange/Bilateral

Improve bilateral trading practices standardization of contracts - transparency

The European Power Market

Future scenario

PE
O
EUR

Energy Reference Prices

Nordic
CE
UK / Ireland
Iberian

Nordic
Power
Market

SEE

UK/Ireland
Power
Market
Central
European
Power
Market
South-East
Iberian
European
Power
Power
Market
Market

Indexes for Derivatives

EUROPE
Nordic/Baltic
CE
Iberian
SEE

10

SEE Wholesale Market opening

European power market integration

Ref. EuroPEX-etso

11

SEE Wholesale Market opening

European spot prices
Ref EuroPEX

12

SEE Wholesale Market opening

Main recommendations by the Consultant

Wholesale Market Opening in the region requires a regional solution

Regional solution is based on a de-centralized regional market design

Implementation with national control and regional cooperation

Each national market developed in parallel with the regional market

No separate national competitive wholesale markets

No break-up of national incumbents

Align development of SEE markets with mainstream European trends

Use of implicit auctions in close cooperation with the CAO
Full competition between OTC/Exchange/Bilateral

13

Improve bilateral trading practices standardization of contracts - transparency

13

CAO Regional PX

Solution for allocation for DAM and timeline

TSO allocations

Security margin
(X% margin)

Day-ahead implicit auction

CAO Explicit auctions

DAM
reservation
(D% reserved)

Long-term
auction
(year, quarter,
month, week)

Transfer to DAM
(Use It Or Get Paid)

DAM
utilization

(Z)

(TCDAM )

(Y% available)

Calculation of available transmission capacity for DAM implicit auction

(performed at 10:00 D-1):
TCDAM= D + rest of Y + Z + released portion of X
in both directions
The remaining capacity after DAM is available for Intra-day trading

14

Intraday/
Balancing
Mechanism

SEE Wholesale Market opening

Main recommendations by the Consultant

Wholesale Market Opening in the region requires a regional solution

Regional solution is based on a de-centralized regional market design

Implementation with national control and regional cooperation

Each national market developed in parallel with the regional market

No separate national competitive wholesale markets

No break-up of national incumbents

Align development of SEE markets with mainstream European trends

Use of implicit auctions in close cooperation with the CAO
Full competition between OTC/Exchange/Bilateral

15

Improve bilateral trading practices standardization of contracts - transparency

15

SEE Wholesale Market opening

DAM is the basis for additional trading

Reference Nord Pool Monthly Report 2009 end of October

16

SEE Wholesale Market opening

Transitional Period

Recommended actions during Transitional Period

Unbundling of suppliers and generators

Cross-border capacities allocated to the DAM

TSOs to allocate increasing interconnection capacities to DAM

Focus on enhancing liquidity in organized markets

Base load contracts offered on fixed favorable tariffs to ECs (contracts defined
by Regulators) to secure predictability and incentives to participate in DAM

17

Hourly variations not covered by base load contracts to be traded in DAM

Public Suppliers to buy parts of Tariff Customers consumption from DAM

Dominant Generators need to participate in DAM

TSOs to buy losses from DAM (Regulators to define rules)

17

SEE Regional Power Market

Trading portfolio for EC & Suppliers

Eligible consumer purchasing his estimated consumption

MW

Hourly contracts
filling the gap
between estimated
consumption and
bilateral contracted
volume

Hourly contracts

Bilateral contract with

Traders/Suppliers

DAM

Bilateral contract with Trader

Own production

Base load contracts with PS/S

24 hours
18

Transition Period: Market and Regulated Prices

MWh/h

Generator

Generation output

Increased efficiency and/or new

generation capacity

Volume sold at
market price to EC,
Traders, Suppliers and
PX

Volume sold at
regulated price to EC
and Suppliers
t0 t1

t3

t2

19

time

t1, t2 and t3 to be
decided by Authorities

Transition Period: Market and Regulated Prices

MWh/h

Eligible Consumer and Supplier

Estimated consumption
in t0

demand response

Volume purchased at
market price

Volume purchased at
regulated price from
generator or supplier

t0 t1

t3

t2

20

time

t1, t2 and t3 to be
decided by Authorities

SEE Regional Power Market

Phase 1

HU

Impl. auction
Candidates
Preparing for impl.
auction
Explicit auction

21

21

SEE Regional Power Market

Phase 3

HU

Impl. auction
Explicit auction

22

SEE Wholesale Market Opening

National Action Plans

National action plans (to be developed)

Current status

A short section on the current status of each Contracting Party

The topics will be the same per country

Barriers/obstacles

What are the local barriers and/or obstacles (with reference to the report)

Required decisions

Local decisions needed to be able to join the regional market

Detailed tasks/actions

Specify content of the general action plan for each Contracting Party

Plan is to distribute on December 4th to regulators for comments

Short documents (max 5 pages)

Comments and telephone conference with each representative the following two
weeks

23
23

SEE Wholesale Market Opening

National Action Plans

Minimum requirements

Current
status

TSO unbundling
GAP
analysis

Supplier unbundling
Eligibility
CPs

Balance responsibility
and balance mechanism

Market concentration

Albania
Albania
Bulgaria
Albania
Albania
Romania

Large
gap

Transparency
Establishment of DAM
24
24

No
gap

Thank you!