Presentation on theme: "Disclaimer Some elements of the following presentation are extracted from documents approved by the 11 CWE Project Parties. However, this presentation."— Presentation transcript:
1 CWE Flow Based Market Coupling Presentation of the project to the CSE IG Milano, 3 June 2008
2 DisclaimerSome elements of the following presentation are extracted from documents approved by the 11 CWE Project Parties. However, this presentation is made in the name of Powernext and RTE only, and does not commit the other CWE Project Parties.Furthermore, the following presentation is not a CWE project working paper, and presents only some facts and opinions on the CWE project.
3 Project organization – 1 Complex project11 parties involved, many stakeholdersTechnical complexity of the projectHigh range of expertise neededDifferent legal frameworkProfessional project organisation and management is requirement for successThree phasesDesign phase until July 2008Regulatory approval (2-3 months)Implementation phase (planning to be defined)
4 Project organization - 2 MeetingMonthlyJOINT STEERING COMMITTEE: All Partners / Co-Chaired by TSO/PXEvery 2 weeksJOINT PROJECT BOARD : All Partners / Chaired by Project ManagerCoordination Team : Project Manager + Workstream Leaders + Subproject LeadersCommunication Coordinator+ Distribution list All PartiesWeeklyWorkstream Legal & GovernanceWorkstream Algorithm Design+ Task forceswhen neededWorkstream Market DesignWorkstream TechnicalWorkstream RegulatoryWorkstream CommunicationSubproject TSO – Flow Based Model
5 Interaction with PLEF/REGs PurposeInform regulators and other stakeholders on progress and solutionsFacilitate regulatory approval procedure and market consultationTake into account REGs concernsTransparency, non-discrimination, risk of the exercise of market powerProcessPeriodically regulators are informed on the progress and issues through PLEF or IG4 reports during design phaseTechnical meetings when necessary (with regulators and/or market parties)
6 Deliverables to PLEF/REGs Orientation studyProgress reportImplementation study31 Jan30 april30 JulyNetwork modelAlgorithm selectionGovernanceMarket designAlgorithm designTender initiatedImplementation plan – estimated budgetEnd of designProject plan30 NovProject organizationProject deliverables
7 Technical Architecture Overview TSOs Back-end System:- Produces the internal grid analysis- Transfers the grid forecast to the FB SystemFB System:- Produces the Flow model parameters- Sends the Flow model parameters to the MCSystem and the TSOs back-end SystemMC System (CCU): built, operated and maintained by PXs- Runs the market coupling algorithmPXs Trading System:- Aggregates the order information- Transfers the aggregated order information tothe MC SystemBilateral Exchange System:- Calculates the cross-border flows schedules- Sends the cross-border flows schedules to theTSOs Back-end SystemShipping agent:- Sells and buys energy on markets taking intoaccount the results of the MC System- Collects the congestion revenue and sends it to CASCTSOsBack-endSystemBilateralExchangeSystemFB SystemShippingagentMCSystem(CCU)PXs Trading System
8 Legal & Governance Governance framework Set of arrangements to ensure that CWE market coupling is:Designed, built and operated to meet the needsAble to support extensionsGoverned by a combination of regulations, agreements, contracts, licences, shareholder agreements, procedures, etc
9 Design of the Market Coupling system WS Algorithm designMC system algorithm basis : 5 steps processDefinition of requirements and evaluation criteriaInventory of technical optionsEvaluation of technical options and decision on algorithm basis (ongoing)Finalisation of the algorithmFull documentationWS TechnicalMC system design : IT specifications ongoing
10 Business processes WS Market design Description of business processes ongoingDecision on price / volume coupling takenBefore the merge of the spot market of Powernext and EEX : Price coupling in TLC region + tight volume coupling from TLC to GermanyAfter the merge : Price coupling on the whole regionFall back arrangements : Explicit auctions or Capacity distribution or IntradayTSO Sub Group Flow Based ImplementationThe FB prototype has been validated at the end of 2007
12 CWE: a complex project Main constraints Technical and governance issuesVery tight timelineMany resources involvedAdvancing… but heavy organisational constraints to deal with!Several requests for further extensions
13 Overview of the current European regional integration projects Many regional market systems projects are running in parallel:CWE has to deal with:flows from the Norned and the Britned cablesand the EMCC projectOngoing discussions in the Central South but also in the South-West regionOngoing / Foreseeable regional integration projects
14 Integrating Spot power markets requires important resources and commitment from stakeholders Overlapping projects, while, in principle, one market area can participate in one implicit auction onlyCurrent discussion between CWE and EMCC / Norned participants illustrates the complexity of projects aiming at coupling already coupled or overlapping regions:Increasing number of parties, working on the consensus principleThe variety of partners (commercial vs. regulated cost & revenues, private vs. public, supervised by different regulators, liquid vs. not yet liquid…) creates heterogeneous incentivesHarmonization requirements (e.g. GCT, price boundaries…)
15 Going forward while managing the risks: How to proceed? - 1 Risks in launching different market integration projects in parallel :Risk of unmanageable overlapping integration projectsRisk of inconsistency of the chosen interregional solutions regarding the other regional systemsRisk of ill-designed interregional solution on the long-termProject complexityIncompatibilitySystem quality problems
16 Going forward while managing the risks: How to proceed? - 2 Proposed methodology :Going further in the knowledge-sharing work regarding the features of local markets and the harmonization requirements for regional integrationKeeping the CS IG informed on the CWE FBMC projectKeeping the CS IG informed on the studies and the further developments made by GME on implicit auctionsIt is important to assess the possible modalities of coexistence of the CWE and CS regional initiatives.