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Electricity Regional Initiative Central-South Europe Region 4th Stakeholder Group meeting

Electricity Regional Initiative Central-South Europe Region 4th Stakeholder Group meeting The Central South Region and the European target model How to ensure consistency Riccardo.rossi@eon.com. Context: the EU target model. New price Zones ?. Flow based DA Allocation ?.

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Electricity Regional Initiative Central-South Europe Region 4th Stakeholder Group meeting

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  1. Electricity Regional Initiative Central-South Europe Region 4th Stakeholder Group meeting The Central South Region and the European target model How to ensure consistency Riccardo.rossi@eon.com

  2. Context: the EU target model New price Zones ? Flow based DA Allocation ? Harmonised balancing rules firm XB trans- mission rights Forward trans- mission rights H-1 gate closure continuous XB intraday markets Day-ahead price coupling unbundling and regulated TPA self dispatch market driven end-user prices market driven investments

  3. Cross border aspects of the EU target model Firm forward transmission rights allocated by TSOs Day ahead implicit market coupling (price coupling) Continuous intraday allocation thanks to one unique SOB, interim model with OTC capability Cross border procurement of balancing energy and reserve capacity  Focus on the Italian electricity market in the CS Region

  4. Main features of the Italian Electricity Market Forward Market • financial forward market • forward PTRs Day Ahead • “Mandatory” Power Exchange – GME i.e. bilateral deals to be submitted to GME • Market Coupling with Slovenia - explicit allocation of the XB capacity with other neighboring countries • National Market based on Market Splitting – Italian market divided in 6 bidding zones • Nodal bidding i.e. balancing circle=generation unit • Asymmetric price: Selling price= Zonal Prices VS Buy price=Unique National Price (PUN) • Settlement in m+2 • Hourly products/No block bids Intraday • Mandatory Power Exchange - GME • Only national market; cross border ID • 4 auctions (“MI”), two in day D-1 and two in day D • Nodal bidding • OTC not possible • Hourly products/No block bids Balancing • Balancing and Redispatch altogether • Market based solution • Price steps constraints • Nodal bidding i.e. each generation unit • “Pay as Bid” • Several sessions, starting already in the D-1

  5. Building blocks for the CS Region integrationForward Market Current arrangements PTRs available on all borders Availability of instruments (CCC) to manage price risk of the fee for Assignment of Rights of Use of Transmission Capacity (CCT) Main measures needed Integration with CASC started in 2011, but full integration on rules needed (e.g. firmness and compensation) Forward Market

  6. Building blocks for the CS Region integrationDay Ahead Main measures needed Ensure a consistent set of traded products and order format are available to market participants Ensure that the price zones are relevant both for supply and demand Introduce portfolio bidding (i.e. per bidding area) Remove any mandatory requirements to participate in day-ahead market Coupling with remaining neighbouring countries, including shift of gate closures Standardize the payment period Day Ahead

  7. Building blocks for the CS Region integrationIntraday Main measures needed Introduce continuous intraday trading with a continuous OTC market for the national market and together with neighboring countries Progressively move to H-1 gate closure for nominations (i.e. 1 hour neutralisation lead-time) Introduce portfolio bidding (i.e. per bidding area) Establish SOB platform for intraday orders with explicit access: develop implicit allocation for intraday markets with progressive pooling of XB liquidity Intraday

  8. Consultation for ID X-Border capacity allocationEFET main remarks • Auctions possible only as interim solution, need for a roadmap to fully implement the target model. • Need to enable bilateral trading using X-Border capacity (Current nomination deadline for OTC is at d-2.) • All 24hrs must be covered by X-Border Intraday Auctions “XBIDs” • XBID1 to be held later in the afternoon i.e. > 4pm D-1 • More XBID sessions, closer to hour of delivery • Need for UIOSI principle for allocated capacity • Fall back solution needed • Longer bidding window (>15mins) • A solution has to be found also for the Italian and Greek border

  9. Building blocks for the CS Region integrationBalancing Main measures needed Purchase of electricity for balancing and redispatch after the gate closure of Intraday market (target: H-1) Remove price bidding limitations Separate the procurement of electricity for balancing and redispatch purposes Balancing

  10. Other desirable features to be harmonised • TSO providing full transparency on its activities in the markets • Increased operational TSOs cooperation on capacity calculation, system management in real time and before real time • Generation capacity owned only by market participants  TSOs should not be allowed to own generation/storage assets • Solving market distortions that could cause the need for Capacity Remuneration Mechanisms • All market participants, also RES producers, shall be responsible of balancing their own position • ...

  11. Thankyou!

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