Flow- based Market Coupling: Implementa9on of the CWE FB Project Andrew Claxton APX Co- Chair, CWE Steering Commi5ee 1
Themes! Introduction to Flow-based idea! Update on progress: the Parallel Run! Key issues raised by market participants! Planning and next steps 2
Market Coupling! Goal :! Competitive energy market for enlarged European Union! Electricity should flow between member states as easily as it currently flows within them! Obstacle :! Historically, markets were vertically integrated on a national basis! Cross-border interconnectors have been less developed, increasingly congested! Building new transport capacity is costly and slow! Long term structural solution :! Increase of capacity or new interconnectors! Incentivize best locations for new generation units! On short term optimize use of existing infrastructure :! Allocate scarce transmission capacity via market-based mechanisms! Flow-based allocation to better reflect physical reality 3
Main concepts of CWE FB The security of supply domain Exchange(A>C) 4 Monitored Lines Line 1 Line 2 Line 3 Outage scenario Margin leg (MW) Influence of exchange on lines (PTDF) Aà B Aà C Bà C No outage 15 1% 1% 3% Outage 1 12 5% 2% 1% Outage 2 1 6% 25% 1% No outage 15-2% 5% Outage 3 1-12% 1% No outage Outage 4! Numbers are for illustrafon only 3 2 1-1 - 2-3 Exchange(A>B) 4-3 - 2-1 1 2 3 4-4 Constraints Security of supply domain 4
Main concepts of CWE FB ATC & FB constraints theory! Security domain is obtained by taking into account all the relevant physical constraints of the grid Exchange(A>C) 4 3 2! Given the security domain, NTC/ATC constraints and the corresponding NTC/ATC domain are a choice made by the TSO 1-1 Exchange(A>B) - 4-3 - 2-1 1 2 3 4-2 - 3! The FB domain is the security domain itself - 4 constraints polyhedron NTC/ATC security domain Flow- based 5
Main concepts of CWE FB ATC vs FB constraints theory! FB offers more trading opportunifes with the same level of security of supply Exchange(A>C) 4 3 2 1! In FB capacity split is not a choice of the TSO, but is market driven (at the Fme of allocafon) - 1 Exchange(A>B) - 4-3 - 2-1 1 2 3 4-2 - 3-4 constraints polyhedron NTC/ATC security domain Flow- based 6
External parallel run overview (1/2)! The first months of the external parallel run indicated a need for further stabiliza9on of the opera9onal process in order to provide representafve simulafon results! Non- representafve days, which were consequently missing in the publicafon, were subject to project partners invesfgafon and reasons were published on CASC s website: h5p://www.casc.eu/en/resource- center/cwe- Flow- Based- MC/Parallel- Run- Results wk Wed Thu Fri Sat Sun Mon Tue 1 Jan 1 2 Jan 3 Jan 4 Jan 5 Jan 6 Jan 7 Jan 8 Jan 2 9 Jan 1 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 3 16 Jan 17 Jan 18 Jan 19 Jan 2 Jan 21 Jan 22 Jan 4 23 Jan 24 Jan 25 Jan 26 Jan 27 Jan 28 Jan 29 Jan 5 3 Jan 31 Jan 1 Feb 2 Feb 3 Feb 4 Feb 5 Feb 6 6 Feb 7 Feb 8 Feb 9 Feb 1 Feb 11 Feb 12 Feb 7 13 Feb 14 Feb 15 Feb 16 Feb 17 Feb 18 Feb 19 Feb 8 2 Feb 21 Feb 22 Feb 23 Feb 24 Feb 25 Feb 26 Feb 9 27 Feb 28 Feb 1 Mar 2 Mar 3 Mar 4 Mar 5 Mar 1 6 Mar 7 Mar 8 Mar 9 Mar 1 Mar 11 Mar 12 Mar 11 13 Mar 14 Mar 15 Mar 16 Mar 17 Mar 18 Mar 19 Mar 12 2 Mar 21 Mar 22 Mar 23 Mar 24 Mar 25 Mar 26 Mar 13 27 Mar 28 Mar 29 Mar 3 Mar 31 Mar 1 Apr 2 Apr 14 3 Apr 4 Apr 5 Apr 6 Apr 7 Apr 8 Apr 9 Apr 15 1 Apr 11 Apr 12 Apr 13 Apr 14 Apr 15 Apr 16 Apr 16 17 Apr 18 Apr 19 Apr 2 Apr 21 Apr 22 Apr 23 Apr 17 24 Apr 25 Apr 26 Apr 27 Apr 28 Apr 29 Apr 3 Apr 18 1 May 2 May 3 May 4 May 5 May 6 May 7 May 19 8 May 9 May 1 May 11 May 12 May 13 May 14 May 7
External parallel run overview (2/2)! However, since the beginning of June, the number of representafve days has increased thanks to a an increased learning curve on operators side and more robust prototype tools wk Wed Thu Fri Sat Sun Mon Tue 2 15 May 16 May 17 May 18 May 19 May 2 May 21 May 21 22 May 23 May 24 May 25 May 26 May 27 May 28 May 22 29 May 3 May 31 May 1 Jun 2 Jun 3 Jun 4 Jun 23 5 Jun 6 Jun 7 Jun 8 Jun 9 Jun 1 Jun 11 Jun 24 12 Jun 13 Jun 14 Jun 15 Jun 16 Jun 17 Jun 18 Jun 25 19 Jun 2 Jun 21 Jun 22 Jun 23 Jun 24 Jun 25 Jun 26 26 Jun 27 Jun 28 Jun 29 Jun 3 Jun 1 Jul 2 Jul 27 3 Jul 4 Jul 5 Jul 6 Jul 7 Jul 8 Jul 9 Jul 28 1 Jul 11 Jul 12 Jul 13 Jul 14 Jul 15 Jul 16 Jul 29 17 Jul 18 Jul 19 Jul 2 Jul 21 Jul 22 Jul 23 Jul 3 24 Jul 25 Jul 26 Jul 27 Jul 28 Jul 29 Jul 3 Jul 31 31 Jul 1 Aug 2 Aug 3 Aug 4 Aug 5 Aug 6 Aug 32 7 Aug 8 Aug 9 Aug 1 Aug 11 Aug 12 Aug 13 Aug 33 14 Aug 15 Aug 16 Aug 17 Aug 18 Aug 19 Aug 2 Aug 34 21 Aug 22 Aug 23 Aug 24 Aug 25 Aug 26 Aug 27 Aug 35 28 Aug 29 Aug 3 Aug 31 Aug 1 Sep 2 Sep 3 Sep 36 4 Sep 5 Sep 6 Sep 7 Sep 8 Sep 9 Sep 1 Sep 37 11 Sep 12 Sep 13 Sep 14 Sep 15 Sep 16 Sep 17 Sep 38 18 Sep 19 Sep 2 Sep 21 Sep 22 Sep 23 Sep 24 Sep 39 25 Sep 26 Sep 27 Sep 28 Sep 29 Sep 3 Sep 1 Oct 8
Key results Price convergence since the beginning of 213! This overview on the percentage of Fme with a single CWE price shows an almost con9nuous higher price convergence under FB than under ATC Price convergence 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % 1 2 3 4 5 6 7 8 9 1 11 12 13 14 15 16 17 18 19 2 21 22 23 24 25 26 27 28 29 3 31 32 33 34 35 36 37 38 39 Price convergence ATC FB FBI Week 9
Cross border spreads DE- NL DE-NL Average absolute price spread ( /MWh) 35 3 25 2 15 1 5 1 2 3 4 5 6 7 8 9 1 11 12 13 14 15 16 17 18 19 2 21 22 23 24 25 26 27 28 29 ATC FB FBI 3 31 32 33 34 35 36 37 38 39 1
Key results Day ahead market welfare (weekly, relafve to ATC)! This overview shows the gain in weekly DA market welfare since the beginning of 213 Thousands ExplanaFon on weeks with negafve welfare will be provided during the acernoon s workshops Development of welfare (XX - ATC) - daily average 8 6 FB ATC higher FB higher 4 2-2 -4 FBI -6 52 1 2 3 4 5 6 7 8 9 1 11 12 13 14 15 16 17 18 19 2 21 22 23 24 25 26 27 28 29 3 31 32 33 34 35 36 37 38 39 Week 11 11
Public Consulta9on Process Concerns Expressed by Market ParFes 12! Before Summer, Project Partners organized a public consultafon on the CWE FB MC solufon! The outcome of the public consultafon/survey can be structured according to following main concerns: FB compared to ATC X // run performance Alloca9on Principles Opera9onal process Timings Fairness Transparency Concerns on welfare losses, volaflity of prices, Fmeframes DissaFsfacFon with results in terms of reliability and stability PublicaFon of the algorithm s funcfoning Request for knowledge of TSO harmonizafon Worries regarding the Fght deadlines Assessment of FB impact on smaller countries Request for capacity calculafon inputs for price predictability
CWE FB MC Project Planning Parallel run Stakeholders acceptance Support July Aug Sept Oct Nov Dec Jan Feb March April Mai June NRA approval package The industrialized FB 213 214 version of the TSO The successful launch of the Common System will NWE DA Project is a prerequisite be available end of for the technical Daily publica9on and operafonal January CWE FB MC Go Live can be expected end of readiness of the FB MC project External parallel run weekly publica3on June 214, subject Industrialized to the tool following dependencies: NWE NWE Rollback Go live Period NRA approval The industrialized Readiness of IT Systems and operafonal aspects Common System and SaFsfactory complefon of the external parallel successful training of run all operators is CoordinaFon with NWE extensions (SWE, etc.) necessary for the and successful tesfng start of the daily Market ParFes implicafon FB experts through FB_UG will meefngs answer your Market ParFcipants readiness (tooling, member publicafon on 1 st of tesfng, addifonal quesfons on the FB MC February UFlity tool request and Q&A Forum for data publicafon) project during the info points on APX and EPEX EMART SPOT stands Market Forum Technical and Opera9onal readiness Market Forum CWE FB MC Go Live 13