Achievements and next steps in the Central-South Region

Central-South Region

3rd SG meeting

Milan, November 16th 2010

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The CS Region, a complex structure…

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2 important markets as France and Germany belong to other 3 Regions – the harmonization process can’t be carried on independently and needs to follow the progress in other regional markets.

A non-Member State at the heart of the region: • Unclear Regional structure: borders identification (Germany is part

of the Region but with which borders?)

• Different arrangements allowed for different borders (CH-FR, CH-AT, CH-DE, CH-IT)

A problematic structure /2

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CB CA in Central South Region

So far only Italian borders have been treated in the frame of the CS allocations

Despite Germany being a member of the Region, no German border have so far been considered in the scope of Capacity Allocation.

A good level of harmonization has been achieved for the auction rules; some “border-specific” provisions still exist mainly for administrative (e.g. guarantees) and nomination (timing) rules. Different compensation rules on the IT-FR border.

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LT capacity products• Transfer Capacities are defined yearly by the Pentalateral Agreement

(Austria, France, Italy, Slovenia and Switzerland)

• Italian electricity prices are regularly higher than bordering markets clear market interest in maximizing capacity allocated on LT timeframes

Borders Average Volume allocated in MW

Average volume

allocated in LT in MW

Percentage of products

allocated in LT timeframe

in 2009

Percentage of products

allocated in LT timeframe in

2008

France – Italy 2701 2300 85% 79%

Austria – Italy 226 218 96% 94%

Slovenia – Italy 360 322 89% 87%

Switzerland – Italy 1786 916 51% 66%

Italy - Greece 739 372 50% 58%

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“ A common coordinated congestion-management method and procedure for the allocation of capacity to the market at least annually, monthly and day-ahead shall be applied by 1 January 2007…” CM Guidelines

A long story

In 2008 a Single Auction Office for CSE Region had been proposed but one TSO, RTE (already involved in the creation of CASC-CWE), rejected the proposal

Several alternatives had been investigated: a TSO auction office, a Service provider agreement, but none has achieved unanimity

In 2010 a final agreement has been reached by the TSOs in having CASC as single auction office with a 2 step approach: from 2011 Italian and Swiss borders with separated rules and from 2012 full harmonization with CWE regions

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CASC to be the CS common auction office

Single point of contact for market participants of the CS region

Single auction office for other Swiss borders (Austria and Germany) from 2011

Push to the harmonization of Swiss, CS and CW auction rules from 2012

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CASC to foster CWE and CSE cooperation

Already 2 RCC joint meeting held in 2010. A joint workshop on LT allocations to be held June 8th 2011 – Stakeholders involvement in identifying priorities (i.e. working towards a fully centralized nomination platform??)

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The new EU “Top-down” approach

The typical approach by which the Regional markets have developed so far will be integrated by the new European legislative framework, with special reference to the network codes

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Next steps – short term Fully exploit CASC potential to foster LT auction rules

harmonization (CWE + CSE), no downwards harmonization will be tolerated – possible further developments to be assessed together with the Stakeholders

Launch the price-coupling between Italy and Slovenia – identify a possible extension of the coupling in consideration of the governance guideline and the new congestion management framework guideline

Intraday: implement a quick solution to react to the infringement procedure by the EC, assessing the market interest. Further development of a market based solution in accordance with the FG on capacity allocation

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Next steps / longer term

Capacity calculation. European framework to be developed (FG on capacity allocation + ENTSO-E project) – There might be scope for cooperation CWE-CSE also on this subject to develop a common grid model

Balancing – FG to be developed in 2011 – Many ongoing projects in several borders in EU – Identification of a possible approach for our region