Agenda

Northern Europe Electricity Regional Initiative 5th Stakeholder Group Meeting

Status of EMCC and CWE-Nordic Market Coupling

Enno Böttcher

Copenhagen26 May 2010

26.05.2010 5th ERI SG Meeting 2

Agenda

Development of interregional volume coupling Nordic - CWE

About EMCC and the current market coupling business

Conclusions and discussion


Nordic-German tight volume coupling


EMCC organisation

EMCC was established in Hamburg in August 2008

ShareholdersTasks and setup

Managing Director

Market Coupling Office

Communications

IT

Scheduling

Accounting

Legal

SettlementMarket Development

front office back office

20%

20%

20%

20%

20%


EMCC`s current focus

EMCC, its internal set-up and its IT system are designed to allow for the extension of its services to other interconnections and markets.

DK1: Interconnector between DK West - Germany (950/1,500 MW)Capacity holder: transpower stromübertragungs gmbh, Energinet.dk

DK2: KONTEK between DK East - Germany (550 MW)Capacity holder: Energinet.dk, Vattenfall AB, 50Hertz Transmission

Baltic Cable between Sweden - Germany (600 MW)Capacity holder: E.ON Sverige, Statkraft

NorNed between Norway - Netherlands (700 MW)Capacity holder: Statnett, TenneT

1

2

3

volume market coupling planned

123

4

4


Daily business process Nordic-German market coupling

anonymous OBK from PXs

Capacityholders PXs

service fee

schedules

congestion rent

financial settlement

12:00

gate closure

order books

Info

Traders

calculation

ATC

09:30

ATCs from TSOs

per cable

bids

before 14:00

CBF publication,scheduling

EPEX price publication

by12:45 by 13:25

NPS price publication

placing additional bids at the PXs

by 12:30by 12:10

start marketcoupling calculation

PXs trade confirmatio

n

afterwards10:00

publish ATC


Nordic-German volume market coupling results

Sum for the interconnectors DK1 and DK2

hours CBF Turnover

% MWh % € %

CBF 85.7% 3,439,536 90.0% 51,394,208 99.70%

AF ≥ 0.20* 3.3% 130,530 3.4% -146,012 -0.28%

AF < 0.20* 11.0% 250,830 6.6% -12,042 -0.02%

Results overall

--- 3,820,896 --- 51,236,154 ---

Cross-border flowFlows and turnover

Results for 170 delivery days (9th Nov. 09 - 30th Apr. 2010; 4,080 hours traded)

MWh

€/MWh

DK GEGE DK

DK

G

EG

E

DK

CBF: cross-border flow due to welfare criterionTurnover: calculated congestion revenueAF: adverse flow; * Euro/MWh


Likelihood of adverse flows for interregional tight volume coupling

The smaller the price difference the bigger the likelihood of adverse flows.

DK1DK2average


Agenda





Integrated European

Market

Long-term plan for the Integrated European Market (IEM)

Glidepath analogyof DA roadmap


A first step: Tight Volume Coupling for the CWE-Nordic region (TVC)


The current solutions will be replaced by an interim solution

Current day-ahead market

Current solutions

1. Market splitting Nordic and Estonia (one PX)

2. Price coupling in the Netherlands, Belgium and France (TLC – 3 PXs)

3. Tight volume coupling between Denmark, Sweden and Germany through EMCC

4. Explicit auctions on other borders

Interim day-ahead market

Intermediate solution

1. Market splitting in the Nordic (NPS)

2. Price coupling in CWE

3. Tight volume coupling on all connections between the CWE and Nordic regions

TLC CWE


The interim solution concept was developed by all parties

Setting of functional requirements

for the interim solution(TSOs and PXs)

EMCC was asked to establish

tight volume coupling

Definition & Initiation

• EMCC develops solution

• TSOs prepare for providing ATCs

• PXs prepare for providing order books

• Establishment of governance arrangements (TSOs and PXs)

Solution Development

• EMCC operates tight volume market coupling

• PXs operate second step calculations

• Continuous work on making solution as tight as possible

Operation2 31

The interim solution establishes tight volume coupling on all interconnectors between the CWE and Nordic regions


Established project organisation – interim tight volume coupling

Joint PX-TSO Steering Committee

GovernanceTechnical & Business

Process

Working group Working group

E-Bridge Consulting

Convenor: Christian Dobelke

Deliverables: •Interim Solution Committee (ISC)

•Interim Solution Agreement (ISA)

•Share option agreement

Convenor: Enno Böttcher

Deliverables: •Technical solution, business processes and timing

•Coordinate fallback solutions

•Coordinate IT-enhancements to existing architecture

•Coordinate implementation, testing and migration of solution

External project management

Tasks:•Assist steering committee and working groups

•Evaluate and integrate results of working groups

•Provide basics for decision-making to the steering committee


Working group governance - interim governance solution

1. partly directly affected (capacity holders, e.g. Energinet), partly rather remotely affected (e.g. Fingrid)

2. partly long-time customers (e.g. transpower), partly new customers of EMCC (e.g. Statnett)

3. partly EMCC shareholders, mostly not

How to grant sufficient influence for a large group of heterogeneous stakeholders ?

1. Contractual basis for ISC

2. Between all CWE/Nordic TSOs and PXs

3. Defining rights and obligations

4. Defining composition, decision making procedures and cost sharing in the ISC

5. Defining termination clauses (“EMCC interim coupling is not a vehicle towards price coupling with EMCC responsible for setting prices”)

6. Completed by sunset clause and share option in case of delayed enduring solution

Interim solution agreement (ISA)

1. Effective control on actions of EMCC in the framework of interim coupling of CWE/Nordic

2. Overseeing the efficiency of service provided

3. Acceptance of design, development, operation

4. Exchange of information between involved parties and decide on joint communication to the market and to the regulators

Interim solution committee (ISC)


Interim solution agreement

• Common agreement between all CWE/ Nordic TSOs and PXs and EMCC (overall contractual basis for ITVC solution between CWE and Nordic)

Share option agreement

• Common agreement between EMCC shareholders and new shareholders

CWE/Nordic interim solution confidentiality agreement

• Common agreement between all CWE/ Nordic TSOs and PXs and EMCC (rgds. the use of confidential information)

Confidentiality agreement - use of market data

• Common agreement between all CWE/ Nordic PXs and EMCC (regarding the use of confidential market data)

Contractual framework of the two workgroups

Cost share agreement

• Common agreement between all CWE/ Nordic TSOs and EMCC (principles of sharing costs among the TSOs)

Cost recovery agreement

• Common agreement between EMCC and CWE/Nordic PXs

PXs service agreement

• Common agreement between all CWE/ Nordic PXs and EMCC (regarding the services the PXs provide to EMCC)

finalized

()

()

() in finalization

()

()

()

()


Working group technical and business processes - issues & solutions

Technical and business process deliverables

Objectives

• Develop and implement an Interim Tight Volume Coupling Solution between CWE and Nordic region for the interconnectors Baltic Cable, DK1, DK2 and NorNed in close cooperation with CWE-Nordic TSOs and PXs

• Management of cross-border flows, shipping and scheduling for the aforementioned interconnectors by EMCC

• Avoid market irritations which may occur from a “loose” sequential market coupling

Tasks

• Development of technical solution and business process in line with the requirements/constraints of CWE-Nordic TSOs and PXs

• Development of a fallback solution and investigation of robust processes

• Improvement and harmonisation of extended day ahead processes to cover exceptional situations

• Coordinated migration of Interim Tight Volume Coupling Solution and CWE market launch


Coordinated elaboration of regional market processes

Start

Step 1

Step 2

Decision

Alternative 1 Alternative 2

End End

yes no

• A coordinated process was initiated between all involved PXs, TSOs, EMCC and IT suppliers

• On 9th February 2010, the 1st meeting of T&BP working group took place

• The business process for CWE-Nordic coupling including fixed timings is currently in final discussion and will be approved soon

• 2nd auction and special routines are included in the process

• It will be flexible in case of technical problems, i.e. the working group will also define fallback solutions

• Market participants will be informed in time

All involved parties are involved in the development of sound processes that comply with national and regional rules and constraints.


Price areas considered today and for CWE-Nordic

SESESAM

FINSESAM

DK1A

SESAM

SEASESAM

NO3SESAM

NO4SESAM

NO2SESAM

NO1SESAM

DK1SESAM

DK2SESAM

GEETS

950/1500 550 600

AUTETS

ESTSESAM

NO5SESAM

R-imSESAM

L-imSESAM

L-exSESAM

Current EMCC market coupling (incl. Baltic Cable):

EMCC calculates 17 price areas and flows on 22 interconnectors for the interregional tight volume coupling between Denmark, Sweden and Germany

700

including NorNed

BEEL-S**

FRETS

NLEL-S*

Interim Phase Coupling for EMCC and CWE

established interfacedevelopment started


Next steps

• Initial technical deliverables will be provided from June 2010, followed by an intensive testing period.

• Before the launch of the TVC solution a market validation test will be performed.

• The CWE-Nordic regulatory authorities are monitoring the interim TVC and CWE MC developments – the ISC reports directly to the regulators.

• All parties agree to start CWE with a tight volume coupling (TVC) with the Nordic market.

• All parties put their strongest efforts to ensure a start as close as possible to 7th September 2010.

The CWE-Nordic regulators invited the CWE-Nordic PXs, TSOs and EMCC to a meeting in

Bonn on 7th May 2010 in order to discuss the status of the TVC solution

If it turns out in July 2010 that a timely start cannot be realised, all parties will decide on mitigating actions.


Agenda





• Tight volume coupling across the CWE and

Nordic region

• More efficient use of cross border capacities,

promotes cost efficiency, security of supply and

inclusion of new renewable generation

• Enhanced transparency through joint solutions

• Cooperation and commitment of all involved

stakeholders

• Process is monitored by the regulatory

authorities

A significant step towards the Integrated European Market

CWE-MC


Contact

Enno Böttcher

European Market Coupling Company GmbH

Hopfenmarkt 31, D-20457 HamburgGermany

+49 40 369 054 [email protected]

Agenda

Documents

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