Evolution of intraday and balancing markets: towards a vision of harmonized cross-border opportunities

Transcription

1 Evolution of intraday and balancing markets: towards a vision of harmonized cross-border opportunities Alfred Hoffmann, Vice President Asset Optimisation Continental, Vattenfall November 21, 2012

2 Vattenfall group - markets and position in Europe Offshore wind power no TWh onshore and Offshore Electricity production no TWh Hydro power no TWh Heating production no TWh Biomass no. 5 1 TWh Electricity distribution no million private customers 5.7 million network customers Technological development Wave energy Trading no. 5 Presence in the most important trading markets Core markets 2

3 Asset Optimisation and Trading Hedging, production planning and dispatching of Vattenfall s generation capacities (coal, hydro, gas, nuclear, wind, biomass) Providing Vattenfall with market access to all relevant commodity wholesale markets (physical and financial): power, gas, coal, oil, biomass, carbon credits, freight, green certificates Sourcing, transporting and storing Developing and marketing of tailored, non-standard products Portfolio management, market access and consulting for industrial customers and municipal utilities Proprietary trading 3 Markets Locations Trade floors Energy Exchanges

4 [GW] [TWh] In 2015 about 50% of the installed capacity will be renewables...contributing about 30% to the produced energy! 180 Installed Installierte capacity Leistung Germany Deutschland Quelle: BDEW/ eigene Angaben 700 Annual Jahrestromerzeugung power generation Germany Deutschland Quelle: BDEW/ eigene Angaben Kernenergie Braunkohle Steinkohle Erdgas 4 Alfred Evolution Hoffmann Wasser of intraday Vattenfall Wind and balancing Europe Photovoltaik AG markets Sonstige Alfred Hoffmann Confidentiality - Critical (C4), High (C3), Medium (C2), None (C1) Kernenergie Braunkohle Steinkohle Erdgas Wasser Wind Photovoltaik Sonstige

5 [GWh] [EUR/MWh] Intraday Market Development Should it be possible to take Intraday positions? Intraday becoming the new Underlying? Intraday Market Clearing? Intraday Preise und Volumen heute Volume Average Price Index Competition on analysis tools and capabilities should be encouraged Intraday positions taking supports realistic Day-ahead price and security of supply as right price signal for commitment is available Day-ahead and Intraday markets do not show systematic price differences Most market participants are still active Day-ahead only Day-ahead prices are important for unit commitment Participants want to close positions asap T+2 determines t+1 price and vice versa Liquidity might not be sufficient No No 5

6 Balancing Market Development I Market Clearing Price? Symmetric Prices? Local Supply? Spot > Balancing Spot < Balancing System System Oversupplied Undersupplied Marginal Balancing Spot Price Marginal Spot Balancing Price vs. Price as bid encourages market participants to develop bidding strategies There is a single auction to contract the reserve capacity needed A MCP would add simplicity and transparency Arbitrage potential between balancing markets and spot markets Alignment between those two markets steer the right way Asymmetric balancing prices would discriminate small portfolios Control areas are core element of the European Security concept No reservation of scarce interconnection capacity European energy local reserve capacity 6

7 Balancing Market Development II Convergence Gas/Power? New Market Entrants? Harmonisation? Most consumers prioritize heat over power Day-ahead competition between those two commodities is reasonable There is no heat without power Priority on power balancing Demand stable Industry as well as renewables are able to offer ancillary services Opportunity costs, however, are often significantly above conventional production Design of ancillary market services differs a lot between different countries No integration before harmonisation 7

8 Cross-border Market Development Intraday Market Coupling? Interconnector Reservations? One stop shop? Market participants are looking for customized products (quick access and block possibility) Would also require intraday market clearing Interconnector capacity is scarce Socio-economic benefit is usually higher if IC is used for power transfer instead of capacity transfer Different gate closures and formats for nomination and settlement processes Significant market entry barriers TSO s should facilitate and platforms offer automated nominations No No 8

9 Conclusion Markets are slowly developing Markets are still highly scattered in terms of design Wholesale markets and it participants jump on imperfections, monetize them and push for consistency Urgent need for new transmission lines in order to solve European challenge of reliable, sustainable and economic supply Big players will be able to cope but is that efficient? 9

10 Backup