ERI CWE Regional intraday trade model for the Central West region Regulators Position 1 /6
Regulators have come to a common position on the way to introduce a regional intraday trading system in the CWE-region. For any intraday-system the main subjects to be decided on are: 1. Market design model 2. Capacity calculation and price of capacity 3. Organisation and interaction with trading platforms 4. Type of intraday products offered and OTC-access 5. Interaction with balancing exchanges Finally this document contains an overview of the regulators common position plus an overview of requests to the TSOs and planning for next steps. 1. Market design model All regulators support the model based on continuous trading with implicit allocation of capacity and obligatory use. Within the current market framework this seems to be the best possible way forward. 2. Capacity calculation and price of capacity Regulators support the use of the netted residual capacity available after the day-ahead market closure. Regulators stress that this is a first step and urge TSOs to develop a more appropriate method in particular in combination with the flow-based calculation for the day-ahead market coupling. Within this method the need and possibility for a market based allocation mechanism and different offering procedure for significant extra capacity which may become available after day-ahead market closure should be studied With regards to the start of intraday trading (i.e. the gate opening time) it is stated that as soon as possible after the nomination procedures for day-ahead are finished the residual capacity should be published and the intraday market should be opened. With regards to the firmness of the offered intraday capacity, it is considered that once a trade is done, the allocated capacity has to be firm. This is in line with the ERGEG position on firmness of nominated capacity. 3. Organisation and interaction with trading platforms Regulators ask TSOs to develop a common regional cross-border capacity management module (CMM). This CMM should be designed such as to in allow access to capacity for bi- and multilateral order books (i.e. provide for appropriate interfaces) and which facilitates efficient allocation of capacity. 2 /6
The centralization of as much as possible bids available in the region in order to accumulate liquidity in the intraday timeframe constitutes a key element of success to attain regional integration. This should also create the possibility for efficient allocation of capacity on a regional basis. Ideally, intraday trade should be organized in such a way that from a market participants perspective it makes no difference if an intraday trade is executed nationally or cross-border. Regulators recognize that such a fully integrated regional intraday trade which at the same time efficiently allocates cross-border capacity may not be achieved in one step within a reasonable time span as this would need a strong commitment of all parties affected (i.e. power exchanges, TSOs, market participants). Therefore, as a first step and a pragmatic approach to efficiently achieve this goal more gradually over time, the capacity management module should allow bi- or multilateral crossborder intraday trading platforms or order books to have access to capacity. Access should be allowed to platforms and/or order books which provide continuous trading with implicit allocation of capacity and obligatory use. A full centralization of liquidity could be achieved by coupling or sharing the order books thanks to a central system or mechanism. This would allow bilateral platforms to be active in the crossborder intraday market provided reciprocal access to (anonymous) order book information. This should be considered as a mechanism to share (or couple) all order books together for the region, and not necessarily as a single order book. TSOs in cooperation with power exchanges and/or intraday trading platforms are asked to assess the implementation of such a shared order mechanism (SOM) that will act as a metasystem between all different trading platforms, bringing all bids and offers anonymously together. Content of this assessment should be timing, practicability, possibility to achieve above goals (bid centralisation and liquidity maximisation) implementation costs, organisational and governance issues. 4. Type of intraday products offered and OTC-access Regulators consider that all cross-border intraday trades should be channelled through the intraday mechanism. Regulators regard explicit allocation of capacity to OTC-trades as a pragmatic first step towards a quick implementation of a regional solution. OTC trades should be made transparent regarding prices and volumes. Regulators will monitor the developments in OTC-trade closely. When assessing the implementation of SOM, TSOs are asked to study the introduction of sophisticated products enabling to start new units (fix costs, minimal duration etc.) in order to replace explicit allocation to OTC-trades while providing for the special needs of market participants. 5. Interaction with balancing exchanges 3 /6
Regulators underline the position, taken in the ERGEG GGP for electricity balancing market integration, that with regards to the interaction with balancing exchanges, no reservation of interconnection capacity should be made for balancing purposes. A clear distinction should be made between the balancing done by market parties themselves and the balancing done by TSOs after the intraday gate closure. The new scheme for intraday cross-border trade should not be detrimental to the enhancement of competition on balancing markets through cross-border balancing, at least, as a first step, at borders where this is already possible. Thus, the features of intraday cross-border trade (gate closure time etc.) should ensure that network security is not jeopardised and provide for symmetric (i.e. in both directions at a border) cross-border balancing. 4 /6
6. Overview of common position and requests to TSOs Table A: Overview of common position CWE-regulators # Subject Common position in Key Words 1 Market Design Model Continuous trading Implicit allocation of capacity Obligatory use 2 Capacity Calculation First Step = netted residual capacity after day ahead Second Step = more appropriate method for capacity calculation in combination with flow-based calculation Residual capacity to be published after finishing nominations day ahead Offered capacity is firm at deal 3 Trading Platforms Develop a capacity management module (CMM) for regional cross border trade CMM must allow access to capacity for bi- and multilateral order books Accumulation of liquidity is essential Centralization of liquidity via shared order mechanism Assessment of SOM requested 4 Products & OTC access First Step: explicit allocation of capacity to OTC OTC transparent regarding prices & volumes Second Step: Sophisticated products to replace explicit allocation to OTC Study which products are equal to OTC needs 5 Balancing Exchange No reservation for balancing purposes Table B: Overview of requests to TSO s Distinction between balancing by market parties versus by TSO s # The Regulators of the CWE-region request the TSOs to: 1 Develop a more appropriate method for capacity calculation in combination with the flow-based calculation. 2 Develop a common regional cross-border capacity management module (CMM). 3 Assess in cooperation with power exchanges and/or intraday trading platforms the implementation of a shared order mechanism (SOM). 4 Study the introduction of sophisticated products to replace the need for explicit access to capacity for OTC-trades. 5 /6
7. Planning TSOs deliver an orientation study and high level design in January 2010. 6 /6