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María Luisa Huidobro Member of the EuroPEX Steering Committee

Development and Implementation of a Coordinated Model for Regional and Inter-Regional Congestion Management. María Luisa Huidobro Member of the EuroPEX Steering Committee.

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María Luisa Huidobro Member of the EuroPEX Steering Committee

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  1. Development and Implementation of a Coordinated Model for Regional and Inter-Regional Congestion Management María Luisa Huidobro Member of the EuroPEX Steering Committee

  2. Background to joint work on:”Development and Implementation of a Coordinated Model for Regional and Inter-Regional Congestion Management”

  3. Challenge from Florence Forum • Joint Action on ETSO and EuroPEX from the Florence Forum ‘The Forum requested ETSO and EuroPEX to write a common discussion paper before March 2008 to address the implementation of regional and interregional capacity allocation methods, in particular the governance of the bodies running the system and to address the technical, legal and commercial challenges implied by the Consentec target model. Other stakeholders were invited to contribute to the discussion and ETSO and EuroPEX were invited to take particular account of the work so far done by EFET.’

  4. Terms of Reference • A working group from ETSO & EuroPEX established in November 07 • Terms of Reference identified 5 broad areas of work • Flow based capacity calculation methods • Long Term & Secondary Market Timeframe • Day Ahead Timeframe • Intraday Timeframe • Legal and Regulatory Issues • Original schedule was to deliver the result in April 2008 • Timescale not realistic – Therefore a two stage approach adopted with Interim in April and Final in November 2008

  5. Glidepath Approach

  6. Market Perspectives – Criteria for success

  7. Need for centrally driven EU-initiative High-level strategy Implementation Approaches ’TOP DOWN’ HIGH Imposed by new EU legislation Formal and coordinated (European) approach via the establishment of market codes and rules (potentially binding) such as envisaged in the EC’s 3rd package proposals; HIGH to MED Developments facilitated by TSOs and PXs at regional and inter-regional level, but with a clear mandate provided regulatory authorities and the EC. ’BOTTOM UP MED to LOW Developments initiated by TSOs and PXs at regional level with the appropriate cooperation and support from regulators and market parties; LOW Implementation approaches

  8. Congestion Management Model Options

  9. DOME COUPLING

  10. Key work towards Final Report • Industry consultation done in June Individual responses (10+) and summary are published on EuroPEX & ETSO homepages • Survey within EuroPEX & TSO about regional/inter-regional development plans & prospects • Roadmap alternatives • Describe paths and issues from bilateral to regional, to inter-regional and European scale for: • Day Ahead • Intra Day • Forwards (Long Term) • Deliver Report and presentation at 15th Florence Forum late Nov. ‘08

  11. Challenge for next phase of project • Elaborate on the choices for the way forward (Day Ahead, Forwards, Intraday) • What the different approaches can deliver: speed of implementation and geographic extent, European harmonisation, quality of solution, etc • What they require: implementation organisation and direction, enduring governance and regulation, etc Feasible glidepath

  12. Implementation Issues SUCCESSFUL REGIONAL PROGRESS TO DATE: CHALLENGES AHEAD FOR INTER-REGIONAL DEVELOPMENTS: • Relatively few parties involved • Common interests, clear regional benefits • Bottom-up / evolutionary processes • Many more stakeholders involved • More divergent interests, wider benefit distribution • A consensual approach more difficult Increasing need for more ‘Top Down’ initiatives?

  13. ALLOCATION : • METHODS • Explicit auctions of physical • transmission rights (PTRs) • Implicit auctions • CAPACITY ASSESSMENT • Flow based ATC • Bilateral ATC Day Ahead Market (DAM) OPTIONS CONSIDERED: • Unified Pan-European solution • Horizontal Integration • Dome coupling • Key features to assess: • Efficiency • Complexity • Implementation challenges • Degrees of centralisation • Governance issues

  14. DEVELOPMENT PATHS: More implicit auctions in DAM PTRs with UIoSI PTRs may evolve towards FTRs Market players want liquidity in a secondary market Development of CfD-markets are independent of TR-solution Forward Cross Border Market OPTIONS CONSIDERED: • Transmission Rights (TR): • PTR with UIoLI • PTR with UIoSI • Financial Transmission Right (FTR) • Energy derivatives: • Contract for Difference (CfD)

  15. DEVELOPMENT PATH: Ensure liquidity and market depth Ensure competition Regional solutions appear to be more important than inter- regional solutions at current stage Intraday Market OPTIONS CONSIDERED: Explicit capacity auctions Implicit auctions First-come-first-served access to capacity obligations Continuous trading

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