Facilitating flexible trading and RES integration...
Transcript of Facilitating flexible trading and RES integration...
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Facilitating flexible trading and RES integration through
organized power markets
David ASSAAD – Head of European Market Integration & Coupling
EPEX SPOT SE
EPG 2012 Summit
Prague | December 4, 2012
2
Agenda
1. Power spot markets role and usage
2. Impact and management of RES penetration in the market
3. Flexible portfolio management: Intraday market developments
4. Outlook: Which role for the market in the future?
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Europe is Relying on Free Markets…
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(Recent statement of European Commissioner for Energy, Günther H. Oettinger)
« Let us for a moment imagine how our energy landscape would look
like without an internal energy market. We would have 27 markets in
Europe, with widely diverging market rules and network operation
rules. Gas and electricity would not flow freely accross borders.
Energy companies would not be able to take full advantage of
economies of scale. The level of competition would be much lower,
with less choice for customers. Security of energy supply would be a
significant concern in many Member States, in particular in those
depending on a single supplier without being adequately
interconnected with other Member States. And meeting our climate
change objectives with 27 markets would be much more expensive
and much less efficient. Without an internal energy market Europe
would be vulnerable. We would all pay the price. »
4
The wholesale marketThe third pillar of the energy value chain
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The role of the Exchange in the timeline
of the market
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6
Products of EPEX SPOT
Day-Ahead Intraday
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Who are buyers and sellers on EPEX SPOT?
In total, EPEX SPOT holds
200 Exchange Members
(Day-Ahead & Intraday)
as of 6 November 2012
Germany / Austria96
France15
Switzerland3
30
47
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Who are buyers and sellers on EPEX SPOT?
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3 EPEX SPOT Markets
• Germany/Austria
• France
• Switzerland
+ Hungarian Day-Ahead Market on behalf of the
Hungarian Power Exchange HUPX
+ Coupling services for Slovakian OKTE,
Czech OTE and HUPX
The Markets of EPEX SPOT
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6 Market Segments
• Auction Germany/Austria
• Auction France
• Auction Switzerland
• Intraday Germany
• Intraday France
• Intraday Austria
• Intraday Switzerland in Q2 2013
EPEX SPOT’S market areas cover an area of 1,200 TWh of yearly power consumption,
which represents 40% of the EU’s Integrated Electricity Market.
A natural incentive to integrate European power markets, facilitated by harmonised trading systems
EPEX SPOT
1.148 TWh (36 %)
3 price areas
Consumption market areas
19 interconnectors with own
and neighbouring markets
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Markets, volumes 2011 and delivery zones
Delivery zones:
12.5 % increase of volume in 2011
57 % increase of Intraday volumes in 2011
241 TWh+ 12%
12 TWh+ 30%
314 TWh in 2011
on all EPEX markets
61 TWh+ 13%
Share of national
consumption:
Intraday FR: 1.7 TWh (+ 70%)
Intraday DE: 15.9 TWh (+ 56%)
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Agenda
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1. Power spot markets role and usage
2. Impact and management of RES penetration in the market
3. Flexible portfolio management: Intraday market developments
4. Outlook: Which role for the market in the future?
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Energy TransitionDevelopment of Renewable Energy in Germany
Installed Renewable Capacity, 2012-2016Renewable Energy Production, 1990 - 2050
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
100
200
300
400
500
600
700
TW
h
HYDRO WIND ONSHORE
WIND OFFSHORE BIOMASS
SOLAR GEOTHERMY
EU RES IMPORT GROSS CONSUMPTION
CO2 EMISSIONS
20%
35%
80%
65,4
72,0
79,0
86,3
94,0
0
10
20
30
40
50
60
70
80
90
100
2012 2013 2014 2015 2016G
W
HYDRO GAS BIOMASS
GEOTHERMY WIND ONSHORE WIND OFFSHORE
SOLAR TOTAL
Analysis: EPEX SPOT; Sources: BMU, TSOs
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0
100
200
300
400
500
600
700
800
0
20
40
60
80
100
120
140
160
180
200
The new form of marketing renewable electricity
through TSOs on the spot exchange is well
adapted to trade those volumes successfully and
transparently.
BUNDESNETZAGENTUR, EVALUATION REPORT 2012
“
“
GW
h
€/M
Wh
Market- & System integrationRenewables on EPEX SPOT – AusgleichsMechV
Increased liquidity
No break in price trend
No increase in volatility
Enhanced transparency
Reduction of marketing costs
Source: EPEX SPOT
Weekly EPEX DAM DE/AT Prices & Volumes, 2009-2012
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-
10
20
30
40
50
60
70
j-1
1
f-1
1
m-1
1
a-1
1
m-1
1
j-1
1
j-1
1
a-1
1
s-1
1
o-1
1
n-1
1
d-1
1
j-1
2
f-1
2
m-1
2
a-1
2
m-1
2
j-1
2
j-1
2
a-1
2
s-1
2
GW
Feed-In Tariff Direct Marketing (Market Premium)
Direct Marketing (Green Power Privilege) Direct Marketing (Other)
Market- & System integrationRenewables on EPEX SPOT – Market Premium
High penetration of the Market Premium Model
Sep. 2012: ~ 40% of installed RES capacities
Increased activity on the exchange of several
Direct Marketers
Flexibility of production reduced to a few hours
Market Model of Renewable Capacities, 2011-2012
21,8 GW
1,7 GW
1,6 GW0,5 GW
0,3 GW
Wind Onshore
Biomass
PV
Hydro
Wind Offshore
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Volumes [MWh]
Pri
x [€
/MW
h]
MC
PM
CP
*
Feed-In Priority & Intermittency Influence on Price Formation
0%
5%
10%
15%
20%
25%
30%
35%
40% Spread Peak-Base (FR) Spread Peak-Base (DE/AT)
0
20
40
60
80
100
120
140
0
10
20
30
40
50
60
70
0 8
16
24
32
40
48
56
64
72
80
88
96
10
4
11
2
12
0
12
8
13
6
14
4
15
2
16
0
16
8
17
6
18
4
Wind forecast[MW] (left)
Residual load [MW] (left)
Exchange price [€/MWh] (right)
D1 D2 D3 D4 D5 D6 D7 D8
Merit-Order
Effect
Change of
Peak-Base structure
Steep
production ramps
1. 2. 3.
GW €/MWh
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EPEX SPOT Day-aheadEuropean Market Coupling
Optimal utilization of interconnectors
Reduction of price volatility
Price convergence of market areas in case of
sufficient border capacity (~60% of hours in 2011)
Smoothing effect on negative or positive price spikes
Propagation of extreme weather conditions (i.e. cold
wave, storm front) on other market areas
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EPEX SPOT IntradayFlexible Trading of Renewables
Introduction of 15-Minute-ContractsIntroduction & coupling of Intraday markets
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
-
20 000
40 000
60 000
80 000
100 000
120 000
140 000
160 000
180 000
200 000
JAN FEB MAR APR MAY JUN JUL AUG SEP
15min buy + sell volume (lef t, in MWh)
15min share (right, in %)
-
20 000
40 000
60 000
80 000
100 000
120 000
140 000
160 000
180 000
200 000
-
10 000
20 000
30 000
40 000
50 000
60 000
70 000
80 000
90 000
H1Q
1
H2Q
1
H3Q
1
H4Q
1
H5Q
1
H6Q
1
H7Q
1
H8Q
1
H9Q
1
H10Q
1
H11Q
1
H12Q
1
H13Q
1
H14Q
1
H15Q
1
H16Q
1
H17Q
1
H18Q
1
H19Q
1
H20Q
1
H21Q
1
H22Q
1
H23Q
1
H24Q
1
15min buy + sell volume (lef t, in MWh)Solar gradient (right, in MWh)
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Enhanced TransparencyTrading Guarantees of Origin on the Exchange
• EEX and EPEX plan standardized exchange for GOs to
increase market maturity.
• Allows preservation of „renewable character“, bundling of
liquidity & transparent reference price.
• Increase confidence in market with secure transactions,
clearing & harmonized KYC processes.
• EEX plans derivative market: delivery on specified date in
the future (ex-ante market)
• EPEX SPOT plans spot market (if liquidity proves
sufficient): immediate delivery (ex-post market).
• ECC manages account in AIB-registry, responsible for
clearing & settlement.
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Agenda
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1. Power spot markets role and usage
2. Impact and management of RES penetration in the market
3. Flexible portfolio management: Intraday market developments
4. Outlook: Which role for the market in the future?
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Intraday market
Buy or sell volumes
that were not able to be
traded on the auction
Better ability to
carry out last-minute
optimization of
portfolio, e.g. in case
of an unplanned
power plant outage
Lower balancing
costs through
advanced optimization
possibilities and more
efficient capacity usage
Enables arbitration
between neighboring
countries, provides
opportunities for
cross-border trading
(e.g. DE-FR)
Reasons for trading on the Intraday market
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• 23rd November 2010:
Single trading system for
France and Germany
(ComXerv)
• 14th of December 2010:
Connection of ComXerv to
the capacity platform
FITS: Flexible Intraday Trading Scheme
Cross-Border trading system
+ Connection to TSOs platform
= FITS (Flexible Intraday Trading Scheme)
Integration of the three trading
platforms to facilitate
cross-border trading
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• Intraday markets are very active both locally and cross-border
• Cross-border trades represented on average 13% of total traded volume
Cross-border trades facilitated by the Flexible Intraday Trading Scheme (FITS) – Liquidity doubled in France
Intraday volumes
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15-minute contracts on the German Intraday
• 15-minute contracts were launched 15 December 2011 on the German
Intraday market
• They are designed to:
• Facilitate the trading with fluctuating power sources
• Meet even better offer and demand, especially within hours with big consumption
differentials
• Help with the integration of renewable power sources into the market.
• EPEX SPOT introduced them in reaction to market demands and to
contribute to the German Energy Transition
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15-minute contracts: Volume development
In September 2012, the total volume traded in 15-minute contracts reached 1 TWh
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• One European integrated solution, handling the trading and the
capacity allocation functions
• PXs are in charge of both functions using a single IT provider
• The model is made mandatory by law (defined in the CACM
Network Codes and governed by the Day-Ahead / Intraday
Governance Guidelines)
• PXs outside of the cooperative agreement will not be able to offer
cross-border trading to their members anymore, since all cross-
border capacity will be allocated on the single SOB/CMM solution
• Explicit capacity allocation to enable OTC trading will be allowed on
certain borders, for an interim period only
Objectives:1. Allocate implicitly all the Intraday cross-border capacity on a
single platform
2. Pool all the PXs’ Intraday liquidity on a single trading screen
Benefits expected by the Authorities:1. Facilitated cross-border access to Intraday markets
2. Improvement of the intraday liquidity and price-signal
3. Better short-term management of the power system, especially
with regard to intermittent energy
The Intraday Target Model: What and why
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• Selection of a single provider for an Integrated Capacity Platform
(CMM) and Shared Order Book (SOB) system
• CMM/SOB to be developed and made available to all willing PXs
and TSOs of Europe – pan-European solution
• Requirements to handle common market and network constraints
– local parties in charge of implementation and adaptation to
regional/national specificities
Scope
I.
• PXs and TSOs to handle market and capacity allocation
requirements respectively
• PXs to proceed to select a system provider (by end 2012) –
validation by ACER and TSOs against their requirements
• Target for delivery of the system for local implementation: End Q1
2013 ?
• Regular reporting to ACER and ENTSO-E at European level
throughout the tendering process
Expected
process &
Timeline*
*To be confirmed
with ACER
II.
Tender process for the Intraday system
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Lack of harmonization of TSOs allocation
and nomination rules (volume tick, time
interval, gate closure time, manual
procedures, losses…) hinders power
trading:
• Operational complexity
• Limitation of cross-border
competition
• Limitation of energy products
available cross-border
The benefits of intraday market integration
are likely to be outweighed by these
constraints
Challenges of the Intraday Target Model
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Agenda
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1. Power spot markets role and usage
2. Impact and management of RES penetration in the market
3. Flexible portfolio management: Intraday market developments
4. Outlook: Which role for the market in the future?
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OutlookWhich role will the Market play in the future?
Power exchange suitable instrument
for market integration of renewables:
Increased liquidity
Enhanced transparency
Reduction of marketing costs
Renewables impact price formation
during high feed-in & low demand:
Merit-Order Effect
Change of Peak-Base structure
Steep production ramps
Coupling of EU day-ahead & intraday
markets facilitates integration:
Reduced price volatility
Smoothing of price spikes
Flexible trading
On medium to long term, how can national-based policies and market
specificities integrate into a harmonized European Electricity Market?
Harmonization of European support
schemes for renewables
Demand-based renewable supply
reacting to market price signal
Contribution of renewables to system
security
Investment in network infrastructure
Coupling of European Electricity
Markets
Valorisation of storage & demand-
supply
Enhanced transparency for consumers
Based on functioning Energy-Only
markets
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