Greek Electricity Market in Transition: TSO ViewEnergy Commodities Conference, Athens

May 2018

1 IPTO: Company overview

2 The Transmission System

3 The Balancing Market

Contents

IPTO: Company overviewNatural monopoly fully unbundled since 2017

1.

TSO explainedIPTO as System Operator§System Dispatch & management§Electricity supply contracts for ancillary services and settlement of imbalances§Regulated charges as pass-through§Responsible for setting up and operating the Target Model Balancing Market

IPTO as Transmission Grid Operator§System Maintenance; Design & Development (rolling 10yr Plan)§User/3rd party interconnection projects (engineering services)§System access to license holders for production, supply, or trading§Cross-border Interconnections

ADMIE (IPTO) ownership mix

51%

25%

24%

ADMIE HoldingADMIE (Hellenic Republic)State Grid Corp. of China

ADMIE Holding investor mix

69.4%

30.6%

Greek Foreign

51.1%39.1%

9.8%

Hellenic Republic Institutional Private

7 years of legal unbundling1 year of ownership unbundlingITO model for Transmission System Operator as per EU Directive 2009/72/EC

SGCC footprint & key economic interests

ADMIE

REN

CDP Reti

#12

ElectraNet

SGCC

TransCo

§ State Grid Corp. of China (SGCC)World’s largest electric utility900k km transmission lines in ChinaGlobal top2 Corp. on revenues*

§ ADMIE (IPTO) in Greece24% in 2017

§ CDP Reti (TERNA S.p.A.**) in Italy35% in 2014

§ REN SGPS in Portugal25% in 2012

§ ElectraNet in Australia41.1% in 2012

§ 12 TSOs in Brazil100% stakes since 2010

§ National Transmission Co. in Philippines40% since 2007

*2017 Fortune Global 500; **CDR Reti controls 29.85% in Terna SpA

The Transmission SystemThe electricity backbone and wholesale market point

2.

Interconnected Greek mainland & islandssystem in High Voltage (150kV) and extra-HV (400kV)

Backbone of 3, double-circuit, 400kV lines

Submarine cables to Ionian islands and Cyclades islands

Cross-border Interconnections

Hellenic Electricity Transmission

2,863

8,157

0

244

39 1531161

0

400kVOverhead

150kVSubmarine*

66kVUnderground

*Excludes 160km of Greece-Italy interconnection; source: ADMIE (IPTO) as at 31 Dec 2016

Hellenic Electricity Transmission System Transmission lines and substations

21 298 Substations 400/150kV Substations 150/20kV

11,700kmOwned and maintained High-Voltage lines across Greece

11,700km the distance between London, UK and Jakarta, Indonesia

€1.4B €1.0BRegulated Asset Base* Cumulative Investments 2018-21*

*As at 31 Dec 2017; source: ADMIE (IPTO)

Major Transmission Projects

Source: TYNDP 2019 – 2028

The Balancing MarketA key Market towards European Market Integration

3.

Balancing and Ancillary Services Markets

Balancing Market is the last of the four Target Model Markets.

“Balancing” refers to all TSO actions to ensure that demand is equal to supply, in and near real time.• An efficient balancing market can ensure

security of supply at the least cost.

• An important aspect of balancing is procurement of ancillary services.

• “Ancillary services” refer to a range of functions which a TSO contracts to guarantee system security.

Balancing Market EntitiesThe Entities of the Balancing Market are:

• Balancing Service Entities (BSEs): Generating Units, Dispatchable RES Portfolio, Dispatchable Load Portfolio

• Balancing Responsible Entities (BREs): All above entities plus: Non-Dispatchable RES Portfolio, Non-Dispatchable Load Portfolio, RES FiTPortfolio, Interconnections (Imports and Exports)

Balancing Service Entities are represented by Balancing Service Providers (BSPs), Balance Responsible Entities are represented by Balance Responsible Parties (BRPs).

➢ All BSPs must pass certain pre-qualification tests

➢ Participation in Balancing Market is Unit-Based except for aggregators

Balancing Market StructureThe Balancing Market consists of:

• Balancing Capacity Market: The purpose of the capacity market is to ensure that enough resources are available before real time to provide the necessary reserves and that the resources are fairly remunerated.

• Balancing Energy Market: The purpose of the balancing energy market is to balance the system by activating upward or downward Balancing Energy Offers and that Balancing Energy activated is fairly remunerated.

• Imbalances Settlement: All imbalances from market schedules are remunerated at the imbalance price.

Balancing Market OperationThe TSO executes an Integrated Scheduling Process (ISP) to:

• proactively commit or de-commit Balancing Service Entities (BSEs)

• procure Reserves

• ensure network flows security in the Transmission System

The TSO solves close to real-time the optimization problem of the Real-Time Balancing Energy Market to:

• activate mFRR and aFRR Balancing Energy Offers by issuing real-time Dispatch Instructions and AGC Instructions to the Balancing Service Entities

mFRR: Manual Frequency Restoration Reserve; aFRR: Automatic Frequency Restoration Reserve; AGC: Automatic Generation Control

Integrated Scheduling ProcessDispatch Period: 30 mins, duration 00:00 CET to 23:59 CET of D.

The ISP consists of 3 consecutive scheduling phases:

• day-ahead scheduling phase (ISP1) executed at D-1 for all Dispatch Periods of Dispatch Day D (15:00-16:00 CET, D-1)

• scheduling phase (ISP2) executed at the last hour of D-1 for all Dispatch Periods of Dispatch Day D (23:00 – 23:45 CET, D-1)

• intraday scheduling phase (ISP3) executed during D for the last twenty-four (24) Dispatch Periods of D (10:30-11:15 CET, D)

Dispatch day

Dispatch hour 16 17 18 19 20 21 22 23 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

ISP 1

(16:00-17:00 EET) ISP 2

(00:00-00:45 EET) ISP 3

(11:30-12:15 EET)

ISP sessions

Non binding results

Non binding results

Binding results

Binding results

D-1 D

ISP ResultsThe ISP results provide:• a commitment schedule of the Balancing Service Entities;• the FCR, aFRR and mFRR awards per Balancing Service Entity and per

Dispatch Period for the Dispatch Day;• an indicative production schedule of the Balancing Service Entities for

each Dispatch Period of the Dispatch Day, called ISP Schedule.The Integrated Scheduling Process results for awarded reserves are:• ISP1: non-binding;• ISP2: binding for the first 24 Dispatch Periods of D (12 hours);• ISP3: binding for the last 24 Dispatch Periods of D for (12 hours).

FCR: Frequency Containment Reserve, mFRR: Manual Frequency Restoration Reserve; aFRR: Automatic Frequency Restoration Reserve

Balancing ProductsCapacity products:

• Upward and Downward FCR• Upward and Downward aFRR• Upward and Downward mFRR

Reserves remunerated at “pay-as-bid price” for the awarded quantity (for each 30 min dispatch period)

Energy products:• mFRR upward/downward energy • aFRR upward/downward energy

Energy remunerated at “marginal price” for the activated energy quantity (for each 15 mins dispatch period).

Quantity (MW) Price (€/MW/30mins)

Awarded Quantity (MW)

Payment (€/30mins)

Requirement 100 - 100 1150Offer 1 30 5 30 150Offer 2 40 10 40 400Offer 3 50 20 30 600Offer 4 50 25 0 0

Quantity (MWh) Price (€/MWh) Clearing Price

(€/MWh)

Awarded Quantity (MWh)

Payment (€)

Requirement 200 -

55

200 11000Offer 1 50 45 50 2750Offer 2 80 50 80 4400Offer 3 100 55 70 3850Offer 4 60 65 0 0

An ex-post check for actual capacity provision has been designed (unit availability check)

Real Time BalancingThe Balancing Energy Time Unit Interval for the Real-Time Balancing Energy Market is 15 minutes.

All ISP Balancing Energy Offers are automatically converted into 15-minute offers.

All producers are obliged to submit offers for their remaining capacity from the last market schedule. BSPs can provide updated offers for either mFRR or aFRR, at a better price compared to the price submitted to the first ISP.

The TSO, based on short term forecast for the 15 minute real time unit:• Computes zonal imbalances to be covered by the activation of Balancing Energy

Offers• Computes the residual available flows in the inter-zonal corridors for the solution

of the mFRR process• Issues Dispatch and AGC Instructions for BSEs

Balancing Market SettlementSettlement includes all calculations for: Balancing Energy, RedispatchingEnergy, Imbalances, Uplifts, Non Compliance Charges and Balancing Market Fees.

The Uplift Account includes:

• UA-1: for the cost allocation of System Losses.• UA-2: for the cost allocation of Balancing Capacity.

Law 4512/2018 states that the TSO can choose between three alternative schemes regarding clearing, settlement and risk management for the Balancing Market.

According to current design, trading and all calculations will be performed by IPTO, while the HENEX Clearing House will perform clearing, financial settlement and risk management.

Capacity Offers Example

Pmax (MW) 400Pmin (MW) 160Market Schedule (MWh) 200

Capacity Product Volume (MW/30 mins)

Price (€/MW/30mins

)

Capacity Awarded

(MW/30 mins)

Capacity Payment (€)

total capacity reserved

(MW/30 mins)

Μax IDM quantity (MWh)

IDM action

FCR up 20 25 20 500140 30* SELLmFRRup 20 30 20 600

aFRRup 180 35 100 3.500

FCR down 10 2,5 10 2520 10** BUYmFRR down 10 1 10 10

aFRR down 40 2 0 04.635

mFRR down

FCR down

IDM BUY

FCR up

mFRR up

aFRR up

IDM SELL

Market Schedule

Pmin

Pmax Cap

acity Reserved

(up

/do

wn

)

*IDM sell = (Pmax – MS – CRup) (30 mins) = (400 – 200 – 140) / 2 = 30 MWh ** IDM buy = (MS – Pmin – CRdn) (30 mins) = (200 – 20 – 160) / 2 = 10 MWh

Balancing Instructions Example

Market Position Example

0

50

100

150

200

250

300

350

400

DAM IDM mFRR aFRRup aFRRdn

“futures” markets5 mins before real time & real time

real time

37

Thank you!

Iraklis SkoteinosSpecial Advisor to the CEO on Energy Markets

www.admie.gre-mail: i.skoteinos@admie.gr