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“ Market coupling on the Italian border: results and lessons from the Italy-Slovenia coupling, update on the PCR project”. Electricity Regional Initiative – Central South region 4th Stakeholder Group meeting Rome , May 15th 2012.
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“Market coupling on the Italian border: results and lessons from the Italy-Slovenia coupling, update on the PCR project” ElectricityRegionalInitiative – Central South region4th Stakeholder Group meeting Rome, May 15th 2012
The pilot project on the Italian – SlovenianborderA fullydecentralizedapproach
Market coupling outcomessince 1/1/2011Tradedvolumesgrowth • Strong liquiditygrowth on BSP and on the implictauctions • Strong increase in volumesallocatedthroughmktcoupling in addition to the reserved share (35 MW)
Market coupling outcomessince 1/1/2011Price convergence • Some increase in frequency of price convergence, considering an higherprice difference in averageduring first four-month 2012 • The rare occasionsof negative price differentials (ITp<SLp) hasbecome price indifferencecases
Market coupling outcomessince 1/1/2011Efficientcapacityallocation • In 2011 implicitauctionguaranteedefficientallocation and occasional commercial export, whileexplicitauctionalwaysallocated in import. • In 2012 explicitauctionefficientlyexported in 9% ofhoursof price indifference
Lessonslearnt/1 • Coupling withilliquidmarkets • The growth of tradedvolumes on BSP confirmsmktcouplingschemeas a naturalliquidity provider, whichhas the potentiality to make benefit to illiquidmarkets from X-borderliquidity. The overallefficiencyofcapacityallocation are so guaranteedalso in this case. • Short termflexibility • The growth of volumesallocated with respect to the quota reserved to mkt coupling and itspeak in january, also due to the entry into force of new delivery contracts, evidences the preference of market participants for the flexibilitygranted by the dailyimplicit nomination scheme and the chance for them to efficiently use UIOSI clauses, asfinancialcontracts to fix the price received. • Effectivenessalso in wide price differentialborders • The increase of the percentage of hours in which the X borderprices converge is an expectedbeneficialoutcome, with an outstanding 20% of hours with the samepriceduring 2011. • Price differentialrarelychangessign due to the small dimension of the slovenian DAM market, whosedemand on the market isgenerallylowerthan import capacity. • Implicitauctionallocatescapacity in import much more frequentlythanexplicitauction, especially in the hours of priceconvergence.
Lessonslearnt/2 • The benefitsof a decentralizedsolution • The governance and operationalsolutionfor the ItalianSlovenianBorderreflects the PCR decentralziedapproach • Thisenabled a faster delivery of a reliable market coupling solutionbetweentwocountries with differentinstitutional and governanceframeworks. • The needof a stableframeworkfor post coupling arrangements • The benefitsof market coupling callsforgreat market volumes, independentlyfrom the quota ofcapacityreservedto market coupling. Thiscallsforstable and sustainableshippingarrangementsbetween the involevedparties.
The PCR project updateGeneralconcepts • PCR provides coupling solutionfor the EU market • Supportedbyall the EuropeanPXsthroughEuropex • Acceptedby ACER and EntsoEtosupport the start up of NWE coupling • Regularlypresented and debated at the AESAG, Florence and NWE fora. • PCR is a decentralizedsolution • In PCR oneCoordinator PXruns the coupling algorithm, oneBack-Up Coordinator PX provides hot back up service, both on a rotationalbasis. Other PCR PXs can runshadowauctionswithsameinputs and toolstocheck the validityof the results. • Each PX in the EU can decide wethertobe: • a PCR party entering in the rotation forCoordinator/HorBackUp • a PCR party onlyrunningshadowauctions to validate itsprices (PCR Operator) • a PCR party subcontractingitsoperational performance to another PCR Party • a serviced PX by a PCR member • Each PX isresponsibile for itsown DAM prices.
The PCR project updatePCR assets • Algorithm • One single price coupling algorithmencompassing the featuresof NWE, Mibel, Italy-Slovenia and open toembodyfurther EU requirements • Cosmoslongelyselectedasstartingpoint, validationfromEntsoEexpected • Development of a prototype,including MIC and PUN features, nearlyconcluded • Industrializationphaseto start in May. • System design • PBM (PCR Broker& Matcher) supports the decentralizedcouplingapproach by collecting, validating and exchanging the inputs (bids, ATCs, PTDFs) and the outputs (p, q, net positions, flows). • Design phasefinalized, provider selected and industrializationphaseto start in May. • Governance • Cooperation & Coownerhsipagreementsnearlyapproved. • Agreementsconsistentwith the EU DraftGovernanceGuidelines.
The PCR project updateState ofadvancement • Delivery of PCR assets and PX testingbyseptember 2012, in orderto go live on January 2013. • Thisrefers to coupling solution, asprovided by PCR. To couple, pre/post coupling arrangements must bealsoagreed, either on a border by borderbasis or based on common agreedregionalapproach. • Integration Test forRegionalInitiativeswill start on 1st October 2012, tobereadyto go live byJanuray 2013. • Theywill include the TSOs. • Finalizationofpre/post coupling arrangementsrequired. • GME will take part only for the technical test, as Italy willnotbe coupled by such date.
