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Interaction between adjacent markets in South America

Interaction between adjacent markets in South America. 2007 APEx Conference October 14 to October 17 Paris, France. Luis Alejandro Camargo S. Wholesale Market Manager XM S.A. E.S.P. Contents. Regional situation Regional interconnections Andean Community Central America Region

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Interaction between adjacent markets in South America

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  1. Interaction between adjacent markets in South America 2007 APEx Conference October 14 to October 17 Paris, France Luis Alejandro Camargo S. Wholesale Market Manager XM S.A. E.S.P.

  2. Contents • Regional situation • Regional interconnections • Andean Community • Central America Region • The Southern Common Market (MERCOSUR)

  3. Contents • Regional situation • Regional interconnections • Andean Community • Central America Region • The Southern Common Market (MERCOSUR)

  4. Latin America Situation Mesoamerica South America Latin America Nordpool Reference Cap. Installed [MW] 58,263 189,595 189,373 88,921 Reserve MW[%Cap. Inst.] 19,522(34%) 65,625 (35%) 79,811 (42%) 19,528 (22%) Resources Demand [MW] 38,741 123,970 109,562 69,393 Interconnection MW (%Demand) 460 (1.2%) 4,269 (3.4%) 4,729 (4.3%) 15,185 (22%) Net Interconnection situation MER (Central America) ITX Méx - Guat Market coupling (Col – Ecu) ITXs Other countries Common Market

  5. 152 TCF 67% 4 TCF 2% 1 TCF 1% 12 TCF 5% 12 TCF 5% 26 TCF 12% 2 TCF 1% 15 TCF 7% TFC: Trillion Cubic Feet Natural Gas Reserves

  6. Complementarity (Central América - Colombia) Demand Hydrology

  7. Contents • Regional situation • Regional interconnections • Andean Community • Central America Region • The Southern Common Market (MERCOSUR)

  8. Scenery of integration (future) Physical interconnection (future) Interconnection capacities (MW) 200 MW 80 MW Scenery of integration (present) 80 MW 120 MW Physical interconnection (present) 80 MW Central America Policies and processes that facilitate the development of regional infrastructure 100 MW 300 MW 300 MW 336 MW 200 MW 500 MW Andean Community Possible participation of Chile, Venezuela and Panama Agreement CAN 536 (2002) 100 MW 900 MW Mercosur- The Southern Common Market Countries with high electricity demand Many interconnections 6,300 MW 2,000 MW 600 MW 70 MW 2,000 MW

  9. F INTERCONNECTION CAPACITY ALLOCATION E F F F E E Existing E F Future F Long term bilateral contracts Bilateral 1 F E Implicit Auctions Centralized PX Market Splitting 2 E Implicit Auctions Decoupled Systems Market Coupling 3 E E E E

  10. Contents • Regional situation • Regional interconnections • Andean Community • Central America Region • The Southern Common Market (MERCOSUR)

  11. Andean Region 336 MW Col - Ven Contracts TIE Colombia – Ecuador - Peru In progress 500 MW TIE Colombia – Ecuador March 2003 Col - Ecuador TIE CAN 536 Act. • CAN 536 Act. Dec. 2002 Ecuador - Peru(TIE in progress) 100 MW National networks

  12. Electricity Interchanges between Colombia and Ecuador 500MW

  13. Contents • Regional situation • Regional interconnections • Andean Community • Central America Region • The Southern Common Market (MERCOSUR)

  14. 80 MW 80 MW 120 MW 80 MW 300 MW (2009) 100 MW MER Transactions Annual transactions National networks Source: Regional Operator -EOR- www.enteoperador.org

  15. 230 KV line National substation SIEPAC Network Operation date April 2009 230 KV, single circuit Cost M US385 Interconnection substation Panaluya Río Lindo Guate Norte Cajón Country KMS 120 MW Guatemala 281 T Aguacapa 80 MW 80 MW 285 Salvador Nejapa Ahuachapán 270 Honduras Aguacaliente 15 de Sept. 321 Nicaragua 490 Costa Rica 150 Panamá Planta Nicaragua Total Lago 1,797 Ticuantepe Nicaragua 80 MW 300 MW capacity 15 substations Cable OPGW Common Electricity Market Framework Treaty (1995) Transitory regulations of Operation and Trading (2002) Regulator, ISO and PX Regional MER Regulation (2005) Cañas www.eprsiepac.com Parrita 100 MW Palmar Norte Panamá Río Claro Veladero

  16. Contents • Regional situation • Regional interconnections • Andean Community • Central America Region • The Southern Common Market (MERCOSUR)

  17. Interchanges electricity-Mercosur Capacity networks High physical integration Low market integration 200 MW 900 MW 6,300 MW 2,000 MW 600 MW 70 MW 2,000 MW PS: Regional interchanges included of the following binational generators: • Itaipú (Brazil – Paraguay) • Yacyretá (Argentina – Paraguay) • Salto Grande (Argentina – Uruguay) Source: Olade

  18. CONCLUSIONS

  19. Conclusions Andean Countries • Net benefits for coupled markets • However: • Political interference (subsidies, congestion surplus) • Policy of self-supplying • Price formation asymmetries: (fixed costs recovery) • Arbitration and Conflict Dispute Resolution • New interconnections in progress • CAN 536 Act application

  20. Conclusions MER – Central American Market • Regional electricity market with common rules • Interchange reduction • High fuel prices • Technical restrictions • Regional interconnection under construction (2009) MERCOSUR • Bilateral physical contracts …

  21. Links and information source

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