CWE Flow-based Market Coupling Project at EMART Energy 2012 1
Agenda Flow Based Market Coupling: reminder of essentials From ATC Market Coupling to Flow Based Market Coupling: key milestones and main impacts Market communication: provided support for Market Parties 2
Flow Based Market Coupling: reminder of essentials 3
FB MC: reminder of essentials FB benefits The benefit of FB MC Capacity allocation by optimizing the global market of the different coupled spot markets order books while granting the respect of the physical limits of the grid can be translated into three major advantages compared to the ATC methodology: 1) FB increases the proposed capacity offered to the market: Instead of capacity splitting between borders made by the TSOs under NTC/ATC, the FB domain is the full security domain itself More trading opportunities for the market, without ex-ante TSO decisions on capacity splitting Exchange(A>C) 400 300 200 100 0 Exchange(A>B) - 400-300 - 200-100 0 100 200 300 400-100 - 200-300 - 400 constraints polyhedron NTC/ATC security domain Flow-based 4
FB MC: reminder of essentials FB benefits 2) FB improves the cooperation between TSOs: FB description is closer to the reality of the grid natural need for increased cooperation and information exchange between the CWE TSOs FB method has more physical meaning and is more detailed than the NTC method FB reflects the interdependency of the cross-border exchanges coordination of initial local TSO computation FB improves the cooperation between TSOs, which allows an increase in coordination between TSOs 5
FB MC: reminder of essentials FB benefits 3) FB constraints lead to a significantly better Day-Ahead Market Welfare and to better convergence indicators Welfare More than increase 80% of price 8M for convergence 9 weeks NB: Figures computed during the 2011 FB experimental study It has to be taken into account that these experimentation results have been obtained by using assumptions with respect to the flow reliability margin (FRM) used and to the verification step (this last step, potentially reducing the FB domain for SoS reasons, has not yet been systematically tested by TSOs). 6
From ATC Market Coupling to Flow Based Market Coupling: key milestones and main impacts 7
From ATC MC to FB MC Key milestones CWE-Region roadmap and objectives: Harmonization and improvement of long-term explicit auction rules Implementation of a day-ahead Flow Based market coupling Implementation of harmonized continuous cross-border intraday trade Maximization of the amount and the utilization of cross-border capacities Increase of market Transparency Guarantee regarding Security of Supply (SoS) 2007 2010 End 2012 FB parallel run End 2013 Signature of the Memorandum of Understanding by the Pentalateral Energy Forum Launch of CWE ATC MC Launch of CWE FB MC Objective: analysis, design and implementation of a flow-based market coupling between 5 countries of the CWE region Objective: first step towards an integrated day-ahead market while studying a FBMC in parallel Objective: simulating the impact of FB MC Objective: implementation of an algorithm taking into account a more sophisticated grid modeling in order to optimize commercial flows on the electrical interconnections of meshed networks as in the CWE region Objective: To secure the CWE FB MC Go Live following a sufficient simulation and training period 8
From ATC MC to FB MC FB implementation planning Dependencies: Stabilization of FB computation before end of 2012 Duration of external parallel run (one full year vs. 10 months including seasonality) Go Live of NWE, duration of simulations and testing with NWE Regulatory approval 2012 2013 Predictability of LT auctions: As FB MC Go Live is foreseen for the end of 2013, the impact of this market design change on LT capacity auctions is minimized for 2013 July Aug Sept Oct Nov Dec Jan Feb March April May June July Aug Sept Oct Nov Dec Parallel run Internal parallel run External parallel run (weekly publication) External parallel run (daily publication) Delivery to NRAs NRA approval Stakeholders acceptance Approval package Delivery of PC documents to NRAs Public Consultation Survey Final approval package* CWE FB MC Go live window Market Parties implication through FB_UG meetings Support Utility tool and Q&A Forum * Including answers to public consultation s outputs Market Event Market Event Market Event 9
From ATC MC to FB MC Focus on coordination with NWE Thanks to the development of the PCR model and its implementation, the NWE algorithm will be able to handle both ATC and FB constraints, leading to one full price coupling in the whole area Currently all project partners are aligning the respective procedures and ensure the testing and joint simulations for next year The results of the FB parallel run after NWE Go Live will integrate the market results of NWE One important step further towards The 2014 target of the European Commission 10
From ATC MC to FB MC Main impacts for capacity calculation Regarding capacity calculation, the switch from ATC to FB has the following consequences: A major change on TSOs pre-coupling activities, impacting operational activities and IT systems 11
From ATC MC to FB MC Main impacts for capacity allocation Consequences for capacity allocation: Possibility of local counter-intuitive exchanges, as a natural outcome of the FB Market Coupling optimization These counter-intuitive exchanges can be forbidden, yet at the cost of full welfare optimization. An objective report was published on the 2 models (intuitive and plain) which will be simulated and compared during the external parallel run The COSMOS algorithm is designed to handle FB parameters The impact of the switch in methodology from ATC to FB is therefore limited on the allocation side 12
From ATC MC to FB MC Main impacts for traders Consequences for Market Participants trading opportunities : No change in the current bidding interface for traders and a new interface in the shape of the Utility Tool will be available Capacity decisions are no longer imposed by TSOs but are up to the traders who can assess different trade volume combinations thanks to the Utility Tool The input at MPs disposal will be modified: instead of 8 ATC values per hours, FB parameters will be published Tools will be provided to assist traders in handling these parameters (see next slides) and the external parallel run constitutes a long learning period for market participants Traders might adapt their bidding strategy based on increased level of detail and high level of capacity 13
Market communication: provided support for Market Parties 14
Market communication during the external parallel run MP support CWE Project proposes different forums to ensure a clear and transparent communication between all Market Parties and the Project during the external parallel run: 2012 2013 July Aug Sept Oct Nov Dec Jan Feb March April May June July Aug Sept Oct Nov Dec Parallel run Internal parallel run External parallel run (weekly publication) External parallel run (daily publication) Delivery to NRAs NRA approval Stakeholders acceptance Support Continuous meetings will ensure steady exchanges between the Market and the Project Approval package Delivery of PC documents to NRAs Market Parties implication through FB_UG meetings Market Event Public Consultation A Market Event early 2013 to explain the functioning and first results of the parallel run as well as the functionalities of the utility tool Survey Final approval package* Opportunity for MPs to address all questions closely related to FB methodology which will be taken into account in the NRAs approval document Q&A Utility Forum tool CWE FB MC Go live window Platform Available where in in XLS explanations, format and accessible FBUG s outcomes, on CASC s expert Market website will help Market presentations MPs to to do their and simulations Event pedagogical material are available Event during the external parallel run Another Market Forum right before the Go Live 15
Market communication Public consultation/survey In February, the following public consultation documents for your information will be online on all parties websites : Public consultation document: CWE Market Coupling Solution / Daily schedule Fallback arrangement Roll back Coordinated Flow Based capacity domain determination Economic Assessment Intuitiveness Publication of data Intuitiveness Report One month later, you ll be invited to participate in an anonymous way to the CWE FBMC Survey in order to share your feedback regarding these documents via Multiple choice questions on the different topics Free comments 16
Market communication Q&A Forum During the whole duration of the external parallel run, you have the possibility to address questions to the Project Partners via an Q&A Forum on practical matters as: Q & A External parallel run results Usage of utility tool Pedagogical material Your questions will be answered by experts and published in a short delay, a notification will inform you that the answer to your question is now available on the website 17
Market communication Utility tool (1/2) FB addresses transparency requirements and concerns on market players understanding In order to ease the transition from ATC and to provide market players with more grip on the FB domain, a simplified description of the FB domain will be supplied via the Utility tool The following interface also allows simulations for trading volumes of CWE MC Markets for each hour: 24 sets of FB constraints per day, i.e. one per hour (1 set of FB constraints contains approximately 15 to 20 constraints) The utility tool provides an interactive module in order to check the feasibility of combinations of exchanges (either in terms of bilateral exchanges or hub net positions), according to the selected timestamp s constraints. Maximum exchange from BE to DE assuming no other exchanges (Non simultaneous values!) Maximum DE Import (other areas are exporting to ensure the balance) 18
Market communication Utility tool (2/2) Market graphs and a CWE map facilitate the understanding of impacts of trade volumes for hub to hub exchanges: Maximum bilateral exchanges CWE max net positions and bilateral exchanges Data shown for hour: 13 19
THANK YOU FOR YOUR ATTENTION! 20