1. Inter-day Energy Transfer – Opportunity and Risk
Review Group 291 – July 2010

2. Inter-day energy transfer product
Shippers pay to transfer fixed amount of energy (+/-) from today to tomorrow
System neutral over the 2 day period of the service
Commercial Position
Example: Park 2mcm 2
Long 2 1
Day 1
Day 2
Short
Shipper was 3mcm long
Shipper transfers +2mcm to Day 2
Now 1mcm long
Expect linepack to fall by 2mcm
Expect linepack to rise by 2mcm

3. Commercial opportunity – day ahead assessment
Estimated value based on differential between within-day and day-ahead (or weekend) price, on working days.
Average absolute difference 1.2 ppt
=> Max potential market opportunity £2.3m based on 2 mcm release
Park
Loan

4. Commercial opportunity – theoretical maximum
Theoretical maximum value based on differential between within-day and tomorrow’s within-day price (or closing weekend), on working days.
Assumes perfect foresight of price.
Average absolute difference 2.9 ppt
Theoretical maximum potential market opportunity £5.5m based on 2 mcm release

5. Interaction with residual balancing
Operational needs
Service could reduce need for balancing actions
Would only offer service on the day if not expected to lead to balancing actions on day of release
But possibility of subsequent operational need for balancing actions
Counteracted with residual balancing buy
Example: Loan 2mcm, Buy 5mcm
Expect CLP 2mcm lower
Note:
with reference to UNC J (National Grid can accept nominations with ramp rates and notice periods outside of NEXA),
it is recognised that such a service may contribute to balancing actions at a later time
Day 1
Balancing Neutrality Cost
Service Cashflow – excludes gas cost
Effect on market, SMP Buy, and later through subsequent sell

6. Interaction (2)
Inter-day energy transfer could interact with residual balancing role.
Would be difficult to identify when and how much residual balancing linked (whole or in part) to the service.
Price of energy transfer ~ Cashout differential and ~ Day Ahead / Within Day differential <~ 1ppt
Apparent price of reversal = Within Day Price ~ 40ppt
Risk could be managed through incentive