Intraday Cross Border The Netherlands-Belgium

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1 Intraday Cross Border The Netherlands-Belgium

2 Content 1. Overall design 1. Process description 2. Capacity calculation 3. Elbas trading platform 4. Tradable products 5. Timeline & Nominations 2. Contractual impacts 3. Price boundaries 4. Transparency 11/02/2011 2

3 Content 1. Overall design 1. Process description 2. Capacity calculation 3. Elbas trading platform 4. Tradable products 5. Timeline & Nominations 2. Contractual impacts 3. Price boundaries 4. Transparency 11/02/2011 3

4 Intraday Market Coupling Until 16/02/2011 : Continuous trading of hourly and multi-hour products BE: until 5 min before delivery NL: until 1h30 before delivery Two steps required for cross border ID deal Secure cross border capacity via explicit pro-rata allocation mechanism Trade the commodity 11/02/2011 4

5 Intraday Market Coupling After implementation of implicit cross border capacity allocation: Continuous trading of hourly and block products BE: until 5 min before delivery NL: until 1h30 before delivery Orders become available for trading in other market BE orders in NL; NL orders in BE between 21h00 D-1 and 1h30 to 2h30 before delivery if cross border capacity is available Only one step required for cross border ID deal! 11/02/ /10/2010 5

6 NL-BE solution Elia, TenneT operators Capacity Matrix Matching Algorithm Shared Order Book Elbas system Hosted by NPS Local operations by APX/Belpex Separate from NPS Elbas market APX-ENDEX NL market Belpex BE market Clearing/ Notification Systems Clearing/ Notification Systems 11/02/ /10/2010 6

7 NL-BE solution: High Level Architecture TenneT Capacity TenneT Nominations Elia Capacity Elia Nominations Elia Operator ATC Submission Shipper Hub / XB Nominations Shipper Hub / XB Nominations Trader Trading ELBas SFTP Service XB Application EuroLight Market Surveillance / ATC Maintenance Monitoring Hub Nominations Settlement APX-ENDEX Operator 11/02/2011 7

8 Interim solution Interim solution, as much as possible based on existing systems Elbas as is Clearing and settlement as is (via Eurolight) Minimal impact TSO systems XBID application to be built by the PXs connect Elbas to Eurolight and new functionality of cross border nominations taking into account the existing infrastructure. Important improvement of today s allocation mechanism Continuous implicit allocation, coupling of existing ID markets Initial Scope: NL-BE Potential: NL-DE and NL-NO targeted, FR-BE can be investigated 11/02/2011 8

9 Interim solution Facilitates development of an enduring solution Refinement of target requirements, based on learning experience Governance framework can be re-used for enduring solution, although not a necessity Strong commitment of APX-Endex, Belpex and Nord Pool to support establishing the enduring Target Solution, in part given by shared views and secured by similarities in shareholder structures 11/02/2011 9

10 Advantages of Intraday Market Coupling Removes unnecessary risks of trading separately short-term transmission capacity and energy Guarantees the optimal utilization of cross-border capacity More efficient generation capacity utilization Less prone to market abuse (no capacity hoarding) All market participants benefit from cross-border capacity Encourages liquid, robust spot markets Optimal use of capacity Single market Efficient market 1 further step towards European Internal Energy Market 11/02/

11 Continuous implicit capacity allocation No capacity (comparable to today s situation) Market A Market B Buy Sell Buy Sell S:20MW@80 S:20MW@80 S:50MW@75 S:25MW@70 P:50MW@70 P:25MW@65 P:30MW@60 P:25MW@65 P:45MW@60 Market A: Liquid / low spread Market B: few sell / high spread 11/02/

12 Continuous implicit capacity allocation ATC A->B = 60 MW Market A Market B Buy Sell Buy Sell S:20MW@80 ATC S:20MW@80 P:50MW@70 S:50MW@75 S:25MW@70 60 P:50MW@70 S:35MW@75 S:25MW@70 P:10MW@65 P:25MW@65 P:30MW@60 P:25MW@65 P:45MW@60 With 60 MW capacity from A to B 60 MW cheapest sell orders in A are shown in B 60 MW most expensive buy orders in B are shown in A 11/02/

13 Continuous implicit capacity allocation ATC B->A = 30 MW Market A Market B Buy Sell Buy Sell S:20MW@80 S:20MW@80 ATC S:20MW@80 P:50MW@70 S:50MW@75 S:25MW@70 60 P:50MW@70 S:35MW@75 S:25MW@70 P:10MW@65 P:25MW@65 P:30MW@60 30 P:25MW@65 P:25MW@65 P:45MW@60 With 30 MW capacity from B to A 30 MW most expensive buy orders in A are shown in B 30 MW cheapest sell orders in B are shown in A (but only 20 MW available) 11/02/

14 Continuous implicit capacity allocation Matching Market A Market B Buy Sell Buy Sell S:20MW@80 S:20MW@80 ATC S:20MW@80 P:50MW@70 S:50MW@75 S:25MW@70 60 P:50MW@70 S:35MW@75 S:25MW@70 P:10MW@65 P:25MW@65 P:30MW@60 30 P:25MW@65 P:25MW@65 P:45MW@60 A sell order of 25 MW in market A can match a buy order in market B 11/02/

15 Continuous implicit capacity allocation Netting Market A Market B Buy Sell Buy Sell S:20MW@80 S:20MW@80 ATC S:20MW@80 P:25MW@70 S:50MW@75 35 P:25MW@70 S:35MW@75 P:10MW@65 P:25MW@65 P:25MW@65 P:30MW@60 55 P:25MW@65 P:45MW@60 25 MW of capacity used in the direction A -> B (ATC A->B = = 35) 25 MW can be netted in the direction B -> A (ATC B->A = = 55) Orderbooks are updated accordingly Continuous implicit capacity allocation makes intraday markets more efficient and creates more opportunities for market players 11/02/ /10/

16 Content 1. Overall design 1. Process description 2. Capacity calculation 3. Elbas trading platform 4. Tradable products 5. Timeline & Nominations 2. Contractual impacts 3. Price boundaries 4. Transparency 11/02/

17 Calculation of NTC ID - general NTC ID calculated by Elia NTC ID calculated by TenneT Minimum NTC ID is calculated ATC ID (inclusive netting) is calculated and published 11/02/

18 Calculation method at Elia NTC DA A NTC for a day D is calculated on W-1 : DACF file of a historical day Coordination within CWE Taken into account : grid topology, generation data, overall load, import/export per area, weather conditions... on D-2 : reevalution of NTC calculated in W-1 Taken into account new information of parameters regarding grid topology, generation data, weather conditions... Coordination in CWE Finalised on D-1 in the morning 11/02/

19 Calculation method at Elia NTC ID 15h00 : start of grid security analysis 18h00 : deadline to announce to ARPs modifications to nominations of generation units + start of "ID production" procedure 18h00 : DACF file of each hub must be available for day D 18h00 : CORESO calculates "combined DACF file" 19h00 : Elia starts calculation of NTC ID based upon "combined DACF file" and coordinates with TenneT on minimum value + computation of ID ATC (taking into account Y-M-D nominations, inclusive netting) 20h30 : ATC ID publication 11/02/

20 Calculation method at Elia NTC ID Special tool calculates NTC ID on both BE-NL & BE-FR borders (linear optimisation algorithm) Calculation of flows to obtain maximal NTCs on both borders in both directions, based upon : Base Case (="Combined DACF file"), including last update of Generation Grid topology Import/export of each hub Already allocated capacity Y+M+D Weather conditions in CWE and neigbouring regions. Elia values of NTC ID are sent to TenneT 11/02/

21 Calculation method at TenneT NTC ID The calculation method is very similar to the one from Elia: Based on the NTC determined for day-ahead market Reductions may be applied due to the results of the Net Secure Analysis, starting at 19:00, which is based on the "combined DACF-file" Most recent load info is taken into account Taking into account maximum values for import/export on Dutch borders 11/02/

22 Submission of ATC values to Elbas Elia Receive Day-Ahead Nominations TenneT Receive Day-Ahead Nominations Elia Calculate Intraday ATC TenneT Calculate Intraday ATC TenneT/Elia Confirm Intraday ATC Elia Upload ATC To ELBas ELBas Interpret Intraday ATC Elia Confirm ATC In ELBas ELBas XB Trading Available 11/02/

23 Content 1. Overall design 1. Process description 2. Capacity calculation 3. Elbas trading platform 4. Tradable products 5. Timeline & Nominations 2. Contractual impacts 3. Price boundaries 4. Transparency 11/02/

Elbas today The only cross border intraday market in Europe Continuous 24/7 trading Individual hours Blocks bids Norway Sweden Finland A tool to adjust trades

24 Elbas today The only cross border intraday market in Europe Continuous 24/7 trading Individual hours Blocks bids Norway Sweden Finland A tool to adjust trades made in the day-ahead market before hour of delivery Denmark Fast developing liquidity: Germany 1.8 TWh in TWh in 2009 Real-time Reliable Proven 11/02/

25 The Elbas model as-is Developed during the nineties Customer need for adjustment of day-ahead schedules before hour of delivery Risk and uncertainty due to expensive and unpredictable balancing market Need for a more efficient use of the remaining cross border capacity after day-ahead trading Potential for a better use of production flexibility across borders 11/02/

26 Elbas ad-interim Implicit cross border trading makes better use of grid capacity: Immediate improvement of current situation NL-BE Potential to link NL-BE to NO and GE: Access to counterparts with different product mix Access to counterparts with different weather conditions Access to counterparts with different marginal costs Increases the potential for flexible producers (i.e. hydro) Reduces the risk of the balancing market Reduces the risk of prices below marginal cost Learning experience to help develop enduring Target Solution Netherlands Belgium Norway Denmark Germany Sweden Finland 11/02/

27 The Price Information window Information on prices and volumes for series that are open for trade. Only bids for which its possible for you to enter as counterparty, limited by the ATC to/from the area you are located All functionalities can be accessed from the menus (upper part) Important functions also via left mouse-button. E.g., by clicking the best buy- or sell bid contracts can be sold or bought. 11/02/

28 The bid A bid consists of: - the product, i.e. the series - the volume - the price PH(hh)(yy)(mm)(dd) Priority order of bids: 1. price 2. arrival of the bid to the bid register The bid is binding until: - a trade happens, the bid is changed or cancelled - i.e. a bid can be changed or cancelled until a bid finds counterparty in the market 11/02/

selecting them and clicking Change Order (In)Activate by selecting the bids and clicking Activate

29 The Order Book Monitor and change your own bids Valid bid, State -column is Active Bid on hold, State -column is Inactive Cancel bids by selecting them and clicking Cancel Order Change bids by selecting them and clicking Change Order (In)Activate by selecting the bids and clicking Activate or Inactivate (In)Activate all bids simultaneously by selecting Activate All or Inactivate All. 11/02/

30 Content 1. Overall design 1. Process description 2. Capacity calculation 3. Elbas trading platform 4. Tradable products 5. Timeline & Nominations 2. Contractual impacts 3. Price boundaries 4. Transparency 11/02/

31 Tradable products Two type of products Hourly limit orders Can be filled partly Block orders P & V same for all hours Block orders can only match with other (identical) block orders All or none Minimum tick sizes: 0.1 and 1.0 MW 11/02/

32 Content 1. Overall design 1. Process description 2. Capacity calculation 3. Elbas trading platform 4. Tradable products 5. Timeline & Nominations 2. Contractual impacts 3. Price boundaries 4. Transparency 11/02/

33 Short overview explicit allocation Market participant nominates cross border and both hubs 11/02/

34 Short overview implicit allocation Market participant does one hub nomination NL - TENNET Net position: +25MW APX XBSHIP 25MW APX CCP Market Participants BE - Elia Net position: -25MW 25MW APX XBSHIP Belpex Market Participants 25MW Cross border nominations Hub nominations related to XBID cross border flows Hub nominations with market participants 11/02/

35 Impact nominations for market participants Changes are as limited as possible When doing a trade on the market-screen Nominate local hub, according to the local hub nominations criteria (counterparty PX) Cross border nominations will be handled by PX No difference (nor additional information) compared to deals within the country 11/02/

36 Impact nominations for PX Additional nominations are to be handled When parties do a cross border transaction Deal is split up between the hubs Shipping (cross border) is nominated by separate BRP (APX) There will be additional nominations between PX and Shipper 1 cross border deal results in 5 nominations by 5 BRPs All nominations need to be consistent 11/02/

37 Impact nominations for TSO Changes are as limited as possible When doing a trade this results for the TSO in One shipping entity to provide all the cross border nominations (intraday) Only local hub nominations from (local) market participants Gates are only used for TSO-TSO matching of Import and Export nomination by market participants 11/02/

38 Deadlines trading overview Cross border trading on Elbas based on the confirmed ATCs continuously possible until the deadline for the nomination gate Deadlines - Cross border trading is possible until 1h30 or 2h30 before the beginning of the delivery period. - Trading on the Belgian hub is possible until 5 minutes before the beginning of the delivery period. - Trading on the Dutch hub is possible until 1h30 before the beginning of the delivery period. 11/02/

39 Deadlines nominations overview Nominations to the TSOs - Cross border nominations by APX cross border shipping agent: TSOs must receive nominations following the gate system in place (ex-ante) - Hub nominations in Belgium by Belgian market participants: ELIA must receive nominations before 14h00 D+1 (ex-post) - Hub nominations in the Netherlands by Dutch market participants: TenneT must receive nominations 1 hour before the delivery period (ex-ante) 11/02/

40 Gates overview Gate Door Door Scope of the gate Hour ("H") Opened at Closed at 21 21h00 22h00 next day (00h -> 24h) 23 23h00 00h00 next day (01h -> 24h) 01 01h00 02h00 current day (03h -> 24h) 03 03h00 04h00 current day (05h -> 24h) 05 05h00 06h00 current day (07h -> 24h) 07 07h00 08h00 current day (09h-> 24h) 09 09h00 10h00 current day (11h -> 24h) 11 11h00 12h00 current day (13h -> 24h) 13 13h00 14h00 current day (15h -> 24h) 15 15h00 16h00 current day (17h -> 24h) 17 17h00 18h00 current day (19h -> 24h) 19 19h00 20h00 current day (21h -> 24h) Cross border trading continuously possible Until 1h30 (odd hours) or 2h30 (even hours) before the start of the delivery period 11/02/

41 Example for Gate 05 (scope 7h00 till 24h00) Nominations: Trade concluded (e.g 5MW for 7h00-9h00) after closing G03, cross border nominations to the TSOs at the latest at G05 = 06h00 at the latest The PX system will send the netted cross border nominations to TenneT and ELIA respectively The market participants nominate the deal on internal local hub nomination TenneT before 06h00, Elia before 14h00 D+1 Trading scheme: Belpex local trading closes 5 minutes before the delivery period (06h55) APX-ENDEX local trading closes 1h30 before the delivery period (04h30) Cross border closes 1h30 or 2h30 before gate closure (04h30) 11/02/

42 Deadlines trading/nominations overview 11/02/

43 Content 1. Overall design 1. Process description 2. Capacity calculation 3. Elbas trading platform 4. Tradable products 5. Timeline & Nominations 2. Contractual impacts 3. Price boundaries 4. Transparency 11/02/

44 APX-ENDEX Market Rules No changes will be made to market rules & fees Product specification will be available via website 11/02/

45 Belpex Market Rules & Procedures Market Rules Ministerial Decree October 2010: updated for XBID NL-BE Volumes to be expressed in a multiple of MWh Prices to be expressed with a maximum of one decimal Removal CoDAM Entered into force 9 Nov /02/

46 Belpex Market Rules & Procedures Market Procedures More detailed, within framework set out by MR Alignment with MR: 9 Nov 2010 Limited impact, apart from CoDAM Communication at the latest two weeks before (// CWE updates) Updates with concrete info for XBID NL-BE: Contents» Trading phases» Updates w.r.t. ELBas»... 11/02/

47 ARP Contract Elia Annex 2 Reference to explicit allocation updated to implicit allocation Annex 5 No more cross border nominations by ARPs for intraday on BE- NL border 11/02/

48 PV Contract TenneT Grid code approval awaited by EnergieKamer by 15 February 2011 INB rules Agreement for INB will be ended at the launch of the new intraday cross border NL BE mechanism 11/02/

49 Content 1. Overall design 1. Process description 2. Capacity calculation 3. Elbas trading platform 4. Tradable products 5. Timeline & Nominations 2. Contractual impacts 3. Price boundaries 4. Transparency 11/02/

50 Price boundaries Negative prices will be available System has technical limit /MWh Generic setting for all Elbas markets Harmonization between markets required Actual price boundaries will be communicated in a later stage 11/02/

51 Current price boundaries APX-ENDEX Negative prices possible [-3000 /MWh, 3000 /MWh] Belpex Since CWE MC launch, negative prices are implemented [-3000 /MWh, 3000 /MWh] 11/02/

52 Content 1. Overall design 1. Process description 2. Capacity calculation 3. Elbas trading platform 4. Tradable products 5. Timeline & Nominations 2. Contractual impacts 3. Price boundaries 4. Transparency 11/02/

53 Capacity & market data Transmission capacities and market data (anonymous) on website Nord Pool Spot, Elia & TenneT Customer reports (own orders and trades) and detailed anonymous market information via Elbas Price information and market depth Transmission capacities Trade ticker Real-time All individual trade data accessible by participant via existing APX-ENDEX / Belpex facilities and protocols Anonymous statistics on Belpex website and APX-ENDEX ftp server 11/02/

54 Transmission capacities (public website) 11/02/

55 Elbas price information window 11/02/

Intraday Cross Border The Netherlands-Belgium

Intraday Cross Border The Netherlands-Belgium Content 1. Overall design 1. 2. 3. 4. 5. Process description Capacity calculation Elbas trading platform Tradable products Timeline & Nominations 2. Contractual