Market Integration and Cross Border Energy Trading in Emerging Europe
Cecilia Hellner, Senior Advisor Markets, ENTSO-E Secretariat
6th Emerging Europe Energy Summit4-5 November 2010, Grand Hyatt Istanbul Hotel
Overview
Cecilia Hellner, 6th Emerging Europe Energy Summit, Istanbul, 4 November 2010
• Introduction
• ENTSO-E’s roles, responsibilities and contribution to energy policy goals
• Key requirements to move from regional electricity markets to a single European market
• The EU target model
• Network codes and Framework guidelines
• Regional integration and co-operation
• Concluding remarks
• Operational since July 2009;
• Represents 42 TSOs from 34 countries;
• 525 million citizens served• 828 GW generation• 305,000 km of transition lines managed
by the TSOs• 3,400 TWh/year of demand• 400 TWh/year of exchanges
• Replaces former TSO organisations: ATSOI, BALTSO, ETSO, NORDEL, UCTE, UKTSOA;
• Aims to speak for European TSOs with a unified voice
ENTSO-E - THE European TSO platform
Cecilia Hellner, 6th Emerging Europe Energy Summit, Istanbul, 4 November 2010
Article 4: ENTSO
•Charged with working to complete the internal market.
Article 6: Creating network codes
•In line with ERGEG framework guidelines.
•Which become binding.
•And involve extensive consultation.
Article 7: The scope of network codes
•Cross border & market integration issues.
•Without prejudice to Member States’ right to establish codes.
Article 8: ENTSO-E’s activities
•Network Codes•Ten Year Network Development Plans.
•Generation adequacy.
•Winter and summer outlooks.
•Work programs and annual reports.
ENTSO-E’s role according to Regulation (EC) 714/2009
Cecilia Hellner, 6th Emerging Europe Energy Summit, Istanbul, 4 November 2010
How ENTSO-E’s work contributes to energy policy goals
By developing an adequate, strong grid
By guaranteeing secure and reliable power system operations
By promoting a fully developed internal electricity market
By ambitious use of innovation
Ten-Year Network Development Plan
Improved TSO-cooperation, WAMS
Market coupling, intraday platforms
Deploying state-of-the-art technologies
Cecilia Hellner, 6th Emerging Europe Energy Summit, Istanbul, 4 November 2010
The 3rd package and regional market initiatives
• The 3rd package addresses the lack of a cross-border regulatory framework
by providing for institutions (ACER, ENTSO-E) and tools (Framework
Guidelines, Network Codes, TYNDP) to complement the work of Regional
Initiatives
• Priority work areas:
• Cross-border Capacity Allocation and Congestion Management
• Transparency
• Cross-border balancing market exchanges
Cecilia Hellner, 6th Emerging Europe Energy Summit, Istanbul, 4 November 2010
Regional market initiatives
• From a TSO perspective, regional market initiatives (either ERI or regional TSO led coordination) allow:
• Market models with regional specificities to be developed
• The development and improvement of market tools, such as:
– Cross-border capacity calculation and allocation;
– Congestion management;
– The coupling of power exchanges; and
– Gaining operational experience of coordination between TSOs.
• These processes are beneficial to market maturity • However, there is a danger of incompatibility between two or more regions if
different rules and procedures are in place
Cecilia Hellner, 6th Emerging Europe Energy Summit, Istanbul, 4 November 2010
From regional to pan-European markets
• The Third package creates a coherent framework to move from regional to pan-European markets, involving:
1. A Target Model for market integration which sets the goal for a competitive IEM.
2. Binding Network codes that provide the detail to support this goal.
3. Clear governance guidelines that support the codes.
4. Regional co-ordination, led by TSOs and NRAs, which drives the process “bottom-up”
• Together, they create the momentum necessary to move towards a single market.
A clear target model and
binding network codes
provide top-down
impetus.
Coordination between TSOs &
regulators at regional level
provide bottom-up
focus.
Cecilia Hellner, 6th Emerging Europe Energy Summit, Istanbul, 4 November 2010
1.1) Working towards an efficient IEM – The EU Target Model
• ENTSO-E, in collaboration with the EC, ACER and stakeholders, is working to implement a Target model for wholesale market design.
• The Target model, which covers forward, day-ahead, intra-day and balancingmarkets, as well as the calculation of cross border capacity, provides a goalfor pan-European harmonisation to be implemented by 2015.
• It was endorsed by the EU Electricity Regulatory Forum in Florence in 2009.
• There is a fast evolution towards regional markets in Europe. Regional markets are a stepping stone in the process of implementing the Target model.
• But implementing the Target model across Europe by 2015 remains a significant challenge
Cecilia Hellner, 6th Emerging Europe Energy Summitt, Istanbul, 4 November 2010
1.2) The Target Model: Creating consistency
• A consensus view amongst
stakeholders of a model for cross
border congestion and market
integration
• A medium term view for
progressive implementation at the
latest by 2015
• Addresses all timeframes in a logical and sequential way.• Developed in parallel with the regional initiatives.• Can act as a benchmark for consistency and essential cross border harmonisation
and compatibility.
Intraday Allocation
Implicit Continuous
Trading
Day-Ahead Implicit
AllocationPrice Coupling
Monthly
Y+1Futures on Y+1
Explicit AuctionsPhysical and/or Financial Transmission Rights
Harmonised GCT
Coordination of ATCs (Flow
Based and/or NTC)
Flow Based where more efficient
Bal
anci
ng, R
eal T
ime
Flow Based where more efficient
„Physical“ market„Forward“ market
Cecilia Hellner, 6th Emerging Europe Energy Summit, Istanbul, 4 November 2010
1.3) Key features of the target model
• Adjust open positions
• Intermittent generation
• System security
• Availability of resources
• Reference spot prices
• Relevant market signals
• Investment hedging
• Generation adequacy
long-term contracting
liquid day-ahead trading
Continuous intra-day
Real-time balancing
We are working towards an effectively competitive market which benefits TSOs, generators, investors, traders and ultimately customers.
Cecilia Hellner, 6th Emerging Europe Energy Summit, Istanbul, 4 November 2010
•Network Codes (in twelve areas)
•Network connection rules
•Balancing rules including network-related reserve power rules
•Network security and reliability
•Operational procedures in an emergency
•Third-party access rules
•Data exchange and setlement rules
•Interoperability rules
•Capacity-allocation and congestion management
•Rules for trading
•Transparency rules
•Rules regarding harmonized transmission tariff structures (including locational signals and inter-transmission system operator compensation rules )
•Energy efficiency regarding electricity networks
2.1) Network codes: Delivering the detail of the target model
• ENTSO-E is tasked to draft network codes; the codes
will become binding following Comitology decision
• The network codes on market integration are the
means to deliver the target model
• Work on intra-day, day-ahead and capacity calculation
network codes will begin shortly
• Stakeholder involvement through consultation is
crucial to success
Cecilia Hellner, 6th Emerging Europe Energy Summit, Istanbul, 4 November 2010
Central West & Nordic markets
Nov 2010
Central Southmarket
2012/3
South West market
2012/3
UK-NL cable 2011
Fast evolution towards regional markets and networks
On-going regional co-ordination of day-ahead markets
Baltic market
Cecilia Hellner, 6th Emerging Europe Energy Summit, Istanbul, 4 November 2010
A possible roadmap to harmonisation – presented by the EC
Concluding Remarks
• TSOs across Europe have a very important role to enable market integration and cross border trade
• There is a considerable amount of work that is going on to realisethe goal of creating an IEM
• ENTSO-E looks forward to working with stakeholders in this region and beyond to help in delivery this goal
• We welcome your comments and input
Cecilia Hellner, 6th Emerging Europe Energy Summit, Istanbul, 4 November 2010
