BALTIC BALANCING MARKET

Ingrid Arus

Baltic Balancing Market Harmonisation WG meeting

17 01 2008

Introduction and backgroundConditions for create a common balancing marketWhy now?ERGEG Guidelines of Good Practice for Balancing Markets IntegrationMain goal of WG – to study different options to create a common Baltic balancing market

2006 TallinnLithuania:

The development of common Baltic energy market

Common balancing market

Common reserve capacity market

Estonia:

Work out energy policy together

Create transparency (for grid access)

Licensing – make market entry easy

Establish one balancing market

Baltic Minifora meetings :

Baltic Minifora meetings:

2006 VilniusLithuania:

Common Baltic reserve and regulation power market

Estonia:

Harmonized market rules

Latvia:

Baltic Power Exchange

increased trade possibilities; true reference price for electricity; integration of Baltic and Nordic market

Baltic Minifora meetings:

2007 RigaLithuania (all Baltic regulators):

Licensing – proposals for common rules

Conclusion: Regulators can take interim steps to facilitate the entry of prospective participants into our domestic markets and into Common Baltic Electricity Market

Estonia (from Baltic Energy Strategy) weaknesses:

Limited marketplace

Small number of players

Absence of common energy policy

Baltic Minifora meetings:

2007 TallinnLithuania:

What do we need for the functioning market?

harmonised rules of the game

many players

future vision

Estonia:

ERI Convergence and Coherence Report:

Main issues:

congestion management; common policy for import from 3rd countries; balancing rules; transparency

Where is Baltic market?

Baltic Minifora meetings:

2007 Tallinn

It was agreed to establish a new working group, which includes the representatives of the Baltic TSO-s, regulators and independent market participants. The goals are to harmonize existing balance system in Baltic region and create common Baltic (balancing) market in future. The working group will be coordinated by the Estonian TSO (Põhivõrk).

Baltic Electricity Market

Where is Baltic Market?

What we need for creating a common market?(PRE-)CONDITIONS:

• 100% OPENED MARKET (ESTONIA – 35% 2009; 100% - 2013)CONDITIONS:• COMMON RULES

– FOR CONGESTION MANAGEMENT– FOR MARKET ENTRY – LICENSING – COMMON POLICY FOR IMPORT FROM THIERD COUNTRIES– HARMONISED PRINCIPLES OF BALANCING– TRANSPARENCY– HARMONISED ADMINISTRATIVE PROCEDURES

OBJECTIVE:• EFFICIENT MARKET

– EASY ENTRY TO THE MARKET – MORE PARTICIPANTS– COMPETITION– LOWER COST

Why now?

Preparation the opening of Estonian electricity market for all players

Estonian (Baltic) electricity market rules harmonisation with rules applied in Nordel

Estlink price area project – started 11.2007I phase: Price area Estlink, Implicit auction to cover at least part of the Estlink capacity – 09.2008II phase: Price area Baltic, Final target is to createSpot price area to Baltic countries and intradaymarket Elbas – ½ - 2 years after I phase

ERGEG Guidelines of Good Practice for Balancing Markets Integration

ERGEG is committed to the development of an effectively competitive single market for electricity across the whole EU, while at the same time taking into account security of supply and system reliability.

Balancing market integration - as a key issue for an internal electricity market.

Directive 2003/54/EC assigns to the regulator the sole competency for the functioning of the balancing market within a Member State. According to the Article 23, Paragraph 2: “The regulatory authorities shall be responsible for fixing or approving, prior to their entry into force, at least the methodologies used to calculate or establish the terms and conditions for the provision of balancing services”.

Principles and Benefits of Efficient Electricity Balancing Markets

THE PURPOSE of balancing markets is to serve short-term operational security of supply (security of grid operation) in a market oriented way and to deal with imbalance settlement.

BALANCING MARKETS:• should promote effective competition• should not aggravate market power• should be non-discriminatory

BALANCING MARKET shall have • clear rules and • transparent processes

THE RESPONSIBLE REGULATORS must clarify the regulatory route by which the integrated balancing market is monitored and its rules enforced.

Appropriate STANDARDS for AUTOMATIC DATA and INFORMATION EXCHANGE between BRP and market actors during planning, operation and settlement phases of balancing shall be in place to ensure secure system operation and to facilitate transparency.

IMBALANCE ARRANGEMENTS and PRICING RULES shall be made compatible in a truly integrated balancing market.

Principles and Benefits of Efficient Electricity Balancing Markets

– TSOs and other market participants can operate in an economically efficient manner

– More participants

– Competition

– Decreased cost

Main target of WG

Final target: Common Baltic Balancing Market

WG: To study perspectives, principles and timeline for creating the Baltic Balancing MarketDefine the scope of Baltic Balancing MarketIdentify purpose and possible gainsExamine the effects for market participants (inc. TSOs)

Harmonisation of definitionsHarmonisation of planning time-scale; responsibilities in time-scale;Common reserve and regulation marketBalance settlement harmonisation

– number of balances– balancing energy price

THANK YOU FOR YOUR ATTENTION!