Cross Border Flows. Importance for the European Power-Price- Building Mechanisms

Transcription

1 Cross Border Flows. Importance for the European Power-Price- Building Mechanisms German Norwegian Energy Forum 27 October 20, Berlin Dr. Błażej Radomski Head of Analysis - Germany

2 Agenda I. Exchange vs. other price drivers II. III. IV. Different cross border algorithms and solutions What next? Conclusions

3 Agenda I. Exchange vs. other price drivers II. III. IV. Different cross border algorithms and solutions What next? Conclusions

4 Import / Export as production and consumption Import production Export consumption DE NO Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep DE: imp vs exp [MWh/h] PRO DE WND PRO DE SPV NO: imp vs exp [MWh/h] PRO NO2 HY-ROR PRO NO2 HY-RES

5 Temporary conclusion Cross border exchange might contribute to a shift in a Power Balance with more weight than renewables, or other production types. It is often one of the most underestimated fundamental price drivers.

6 Agenda I. Exchange vs. other price drivers II. III. IV. Different cross border algorithms and solutions What next? Conclusions

7 Different types of interconnecting algorithms Different types of border limitation: ATC based solution : Implicit exchange (market coupling) Implicit Exchange & Price Explicit Exchange & Price Implicit & Explicit Exch. Exogenous exchange NO3 : Explicit exchange : Implicit & explicit exchange FBMC solution : FB Capacity Domain, PTDFs

8 Different types of interconnecting algorithms FBMC, 20.May 20 DE, FR, NL, and BE «Country-to-country» connections not relevant in FBMC Must look at flow in the whole area FBMC 4MMC, 19. Nov 2014 RO joining CZ, SK and HU 4MMC ATC based solution No flows in the «wrong» direction anymore

9 Explicit exchange vs. Implicit exchange (market coupling) vs. FBMC Explicit (RO-HU) Implicit 4MMC (RO-HU) Price difference RO-HU vs. commercial flow (RO-HU, pre 4MMC, , 4488 data points) Price difference RO-HU vs. commercial flow (RO-HU, post 4MMC, , 4488 data points) Implicit (DE-FR) FBMC (DE-FR) Price difference DE-FR vs. commercial flow (DE-FR, pre FBMC, , 4556 data pts.) Price difference DE-FR vs. commercial flow (DE-FR, post FBMC, , 4556 data pts.)

10 Temporary conclusion The type of selected cross border algorithm has an impact on the importance of exchange for the power prices.

11 Price coupling vs. price decoupling: DE - NPA Example of the last 7 days: In general higher German prices Only relatively small amount of hours with price coupling Coupling mostly during OffPeak hours Oct- 22-Oct- 23-Oct- 24-Oct- 25-Oct- 26-Oct- 27-Oct- PRI NPA Spot PRI DE EEX Spot price coupling (price Δ < 0.5 ) Price coupling vs. price decoupling situations Price sensitivities in case of a bottleneck

12 Temporary conclusion In case of a border limitation (bottleneck situation) prices react with different sensitivity.

13 Agenda I. Exchange vs. other price drivers II. III. IV. Different cross border algorithms and solutions What next? Conclusions

14 Planned transmission grid extensions Table 6.2: Transnational grid expansion projects Table 6.7: Transnational grid expansion projects Year Transmission links Import Capacity Export Capacity (GW) (GW) 20 Existing capacity Germany-Netherlands Germany-Poland Germany-Netherlands Germany-Belgium (Alegro) Germany-Austria Germany-Zealand Germany-Jutland Germany-Norway Germany-Poland Germany-Switzerland Germany-Sweden Germany-Netherlands Germany-Poland Total capacity Source: MKonline - LTP Germany, LTP Nordic Year Cable links external Capacity (GW) 2019 Jutland-Germany Jutland-Netherlands Zealand-Germany (Kriegers Flak) Norway-Germany Norway-UK Jutland-Germany Jutland-UK Norway-UK Sweden-Germany Zealand-Germany 0.7 Table 6.6: Important internal Nordic grid expansion Year Internal links Capacity (GW) 20 SouthWest-link Swe Ørskog-Fardal Finland-Sweden 0.5/ Jutland-Zealand 0.6

15 Agenda I. Exchange vs. other price drivers II. III. IV. Different cross border algorithms and solutions What next? Conclusions

16 Conclusions Cross border exchange is an important price driver, meaning of which tends to be underestimated. In some situations and also in some markets exchange can contribute to a shift in a Power Balance with more weight than renewables or other production types. The solution chosen for a coupling algorithm (ATC, FBMC) has a crucial importance for the relevance of import/export as a price driver. According to the transition grid expansion plans, the importance of cross border exchange is expected to further rise. We in general expect less hours with a bottleneck situation between Germany and the Nordics.

17 Thank you! Dr. Blazej Radomski Tel