OST and Nord Pool. Status of the Albanian power exchange , En.Trading Seminar Tirana

Transcription

1 OST and Nord Pool Status of the Albanian power exchange , En.Trading Seminar Tirana Matias Peltoniemi Elton B. Radheshi Nord Pool Consulting OST sh.a.

2 European target model the same basic solution The European target model shall ensure the completion of the EU Internal Energy Market for electricity. Guidance and standards for each timeframe: Day Ahead (DA), Intra-Day (ID), Balancing and Forward Market. SWEDEN FINLAND RUSSIA A fair and transparent day-ahead power price is an key factor for the models success. NORWAY ESTONIA Price Coupling of Regions (PCR) The initiative of 7 Power Exchanges to develop a single price coupling solution, launched Feb 2014 EUPHEMIA algorithm IRELAND NORTHERN IRELAND UK DENMARK LITHUANIA LATVIA BELARUS Multi-Regional Coupling (MRC) Coupling of regions and efficient management of available transmission capacities between areas and countries Implicit capacity allocation FRANCE BELGIUM NETHER- LAND LUXEMBOURG GERMANY CZECH REPUBLIC AUSTRIA POLAND SLOVAKIA HUNGARY UKRAINE MOLDOVA Cross Border Intraday Trading (XBID) SWITZERLAND SLOVENIA CROATIA ROMANIA The integrated European electricity market is expected to increase liquidity, efficiency, social welfare and transparency of prices and flows. PORTUGAL SPAIN ITALY BOSNIEN & HERZEGOVINA MONTE- NEGRO SERBIA KOSOVO ALBANIA MAKEDONIA BULGARIA TURKEY GREECE THE SERVICED PX concept opens for easy access Part of MRC initiative today 4 MMC Independent Nord Pool Consulting

3 SEE markets and European market coupling Croatia and Bulgaria Operates MRC/PCR markets Nord Pool as service provider of systems and MRC operation. Waiting for possibility to couple with neighbouring countries. CROPEX has launched an Intraday market during first quarter of 2017, IBEX last quarter of 2017 Albania and Kosovo on path of developing MRC compatible markets and Power Exchange Macedonia has created an activity plan to start a power market and Power Exchange coupling with Bulgaria? Montenegro PX company established, searching strategic partner, cable to Italy under construction. MRC compatible markets key for efficient market coupling with Albania? Part of MRC initiative today 4 MMC Independent MRC compatible markets in development Serbia running independent markets based on European IT solutions 4MMC running coupled markets with MRC IT solutions ready to couple Nord Pool Consulting

4 Bilateral trading with SEE CAO transfer rights ELECTRICITY MARKET STRUCTURE Market Roles as defined in Albanian Market Model (AMM) Producers Balancing market TSO(s) Generation schedules Imbalance settlement ATC Results Balancing market PX Physical sales Reference price Financial hedging Bilateral Financial trading Consumption schedules Imbalance settlement Physical purchases Financial hedging Consumers Nord Pool Consulting Confidential 4

5 Physical delivery ELECTRICITY MARKET STRUCTURE Financial Bilateral Trading Hedging of sell/buy price in advance Financial bilateral trading with freely negotiated contracts Cross-border trading through bilateral contracts Bilateral trading based on capacity bought and nominated in the SEE CAO for each relevant delivery period. 1 year 24 hours Intraday Bilateral trading of CAO contracts Financial bilateral contracts Intrahour 1,5 months Time Day Ahead market Hourly price formation for the following day Transactions concluded at market clearing price determined by the Power Exchange Reference price Day Ahead Intraday market Continuous trading 24/7 Trading of Products during Trading Hours where Transactions are matched automatically when concurring Orders are registered in the Trading System Balancing markets Intra-hour market for maintaining the power balance Bids and offers after DAM closure Imbalance settlement Post-hour settlement of deliveries between market participants Bilateral trading Physical delivery Intraday Albanian Power Exchange Balancing market Physical delivery TSOs Imbalance settlement Financial settlement Nord Pool Consulting Confidential

6 Clearing Old world: Bilateral trading without netting A Bilateral trading with netting A Most trading nowadays: Trading with several counterparties A B C B C B PX C D E D E D E Several counterparties and transactions One transaction for each counterparty Always only one counterparty! Nord Pool Consulting Confidential 6

7 POWER EXCHANGE Aim of the operation of organized markets Competitive market, fair price setting Transparent and efficient flow of funds Albanian Power Exchange Market oriented import and export of electricity Competitive environment to enable supplier switching Nord Pool Consulting Confidential 7

8 Power Exchange Service provider task division Power Exchange responsibilities Market surveillance Price and volumes calculation, Coupling Functions Service provider responsibilities Market development Technical support Customer acquisition process First line support Settlement and risk management Nord Pool Consulting Confidential

9 Power Exchange start up from Service Provider point of view Consulting part System establishment and testing, trainings (DAM, Settlement, Remit) Operations Support and continued development (IDM, MC projects etc.) Cooperation/Consulting agreement IT delivery agreement Operational Agreement/SLAs Nord Pool Consulting

10 Others Bank APEX Membership admission process Membership application including background information to APEX APEX risk check. Possible service agreement(s) in parallel Membership agreement process APEX: settlement account Service Provider: new trading portfolios and access to trading, etc. systems Process complete, new member ready for trading - Inform Service Provider about the balance responsible party - Minimum collateral to APEX Select a bank for collateral and settlement of APEX trades Processes with the selected bank (agreements, etc.) Process complete Taking care of balance responsibility Process complete Registration as a market participant with respective NRA Nord Pool Consulting Confidential

11 Roadmap for PX establishment and go live key milestones Drafting of Joint Venture Agreement with Service Provider 12 months process Development of Draft Shareholder Agreement Appointment of BSHE Director(s) & Management Formal establishment of BSHE as legal person pursuant to Albanian law Many of related tasks already started earlier in 2017 Go-live during 2018 Organizations: Employment contracts, office lease, insurances, auditors, legal compliance Trading/Platform Processes Platform testing, member testing, Dry Runs Issuing of License for PX Go-Live Nord Pool Consulting Confidential 11

12 Power system key figures during last years Albania is a net importer of electricity (20-30% of its demand depending on inflows) and will continue in the near future with such assumption. Exception is made for 2010 with 0.7 TWh of exports and 2016 with small amount of exports. Last year key figures; Imports ~ TWh Demand ~ TWh Generation ~ TWh GWh Production Exchange Consumption 7,750 6,750 5,750 4,750 3,750 2,750 1, (250) 7,610 7,411 6,874 6,636 6,594 6,712 4,343 5,475 3, , A demand decrease in the last 3 years is evident (last year drop was ~4%), mainly due to (i) drastic measures from the Alb. Government to increase collections and efficiency, reduce of non-technical losses as well as (ii) economic situation in the country and (iii) climatic changes. Anyhow previsions are for a small increase of the load for 2017, and 2018.

13 Power system key figures during last 2 years Albania is 100% generation Hydro Generation structure in 2015 Generation structure in 2016 IPP 23% KESH 77% The share of the IPP in the generation structure is increasing year by year.

14 Legal framework and regulatory developments Other very important regulatory acts as a result of the primary legislatin are which set the rules for the establishment and functioning of the PX: Market Rules already prepared and sent for approval, it should have been already in place. Balancing Market Rules under preparation with a TA (ELIA-LDK-E-bridge) financed from IFC. It should be in place by end We are opting for a best European practice in this procces. Certification and membership in ENTSO-e OST has been certified based on the provisions under the new Power Sector Law by the Albanian Regulator on March 15, 2017 being the first TSO to be certified in SEE. Energy Community Secretariat has issued its positive opinion on the Regulatory Preliminary Decision on January On march 30, 2017 OST has become full member of ENTSO-E after its first application in 2004 even the synchronous operation with ENTSO-E dates far in 1985.

15 Main legislative and regulative developments on the PS DAM ERE est. and independence as per PSL Customers Supply liberalization OST certification and membership in ENTSO-e Non-household liberalization Other secondary regulations approved: Market Model approved by the GoA in July, 2016 sets the grounds for the PX as well as stepwise volumes to be traded in the PX. Market rules, which sets the rules of the Operation of the PX, already sent to the regulator for Approval in December Balancing Market Rules under preparation under a Project financed by IFC with the support of a TA and should be in place by beginning of next year.

16 A staged approach protecting the customers Year 1 Year 3 Regulated tariff customers 10,6 and 0.4 kv Purchase MWh Regulated Market Sale MWh KESH IPP TOTAL TOTAL Purchase MWh Customer HV Deregulated Market Sale MWh Purchase MWh Regulated Market Sale MWh Regulated tariff customers 0.4 kv KESH CFD 2 for 70% regulated tariff volumes ( ) ( ) TOTAL TOTAL Purchase MWh Deregulated Market CFD for 70% regulated tariff volumes Customer in HV Sale MWh Clients in 35 kv Clients in 20 kv OSHEE Losses Import or generation by BRPs TOTAL TOTAL Customers 35 kv Customers 20 kv Customers 10.6 kv Customers 0.4 kv - Businesses, Non-budgetary OSHEE Losses Customers outside Albania Import or generation BRPs TOTAL TOTAL Nord Pool Consulting Confidential

17 Implementing WB6 MoU WB6 MoU signed on the 27-th of April 2016 in Vienna by 16 regional stakeholders from 5 countries (Kosovo Stakeholders due to impossibility for any DAM or CB initiative didn t signed anyhow they are actively participating in the Programme SC) As of today different stakeholders from all neighbourhood EU MC of WB6 signed the MoU. Actually we have more than 30 signatory parties on the DA MI and more than 20 on the XBC. Technically very complex objectives in front of us like market coupling (Early CACM implementation, MRC, 4MMC) cross border balancing as well as SoS eventually. Different profile of the signatory parties (Ministries, NRAs, TSOs, PXs) different interests and perspectives 17

18 Programme structure Implementing WB6 MoU DAMI Programme Governance DA MI projects Albania Kosovo - Both Govt. have expressed their commitment for a common market between the two countries - An MoU between OST and KOSTT for the participation of KOSTT in the APEX is already prepared AIMS (Albania - Italy Montenegro Serbia) Market coupling project under evaluation - First meeting between regulators, TSO s and PX successfully completed - ToR for the working group already prepared by the TSO s and under discussions for final adaptation by October Possible deadline for go live Q (when the DC cable will be in commercial operation) 18

19 Thank you! 19