Work shop: Bulgarian Energy Exchange What, How и When? Panel I -

Transcription

1 Work shop: Bulgarian Energy Exchange What, How и When? Panel I - Panel II - Panel III - Project status, trading principles and main activities; Trading platform, settlement and risk management; Discussion;

2 Panel I : Presentation of IBEX EAD Structure and staff presentation CEO Konstantin Konstantinov kkonstantinov@ibex.bg Accounting and finance Administrative assistant Albena Kokova akokova@ibex.bg Svetlana Nikolova snikolova@ibex.bg Layer Project Manager Operations Manager Settlement Manager Radul Iliev riliev@ibex.bg Nikola Gabrovski ngabrovski@ibex.bg Todor Marinov tmarinov@ibex.bg Milena Stoyanova mstoyanova@ibex.bg Market operator Market operator Market operator Market Surveillace

3 Panel I : Presentation of IBEX EAD Development milestones of the Power Exchange г. Incorporation of the Independent Bulgarian Power Exchange EAD as a 100% owned by BEH EAD subsidiary Launch of the selection process for the vendor of the service for operation of a power exchange market Launching the process of association of IBEX to the European organizations governing the integration process - PCR, MRC January 2014 March 2014 June 2014 April 2015 May 2015 Q Obtaining the license for Organizing the power exchange market from the EWRC Finalization of the selection and negotiation processes. Service agreement signing with NORDPOOL SPOT AS. Q Go live of the Bulgarian Power Exchnage.

4 Panel I : Presentation of IBEX EAD What we ve created till now? A B C D E F G H IBEX EAD incorporation, Article of Association adoption and Business plan preparation and submission. Licensing of IBEX by EWRC, under the Energy Law provisions for Organizing the power exchange market. Researching the possibilities for PX operation and settlement and clearing solution. Preparation of technical requirements, selection process and contract signing. Market Rules amendments, internal governing rules, contracts and procedures Association of IBEX to the European governing the integration process organizations - PCR, MRC IBEX web site creation and launch Preparation for starting the market testing and trial. 60% 80% 80% 100% 100% 100% 100% 100%

5 Panel I : Presentation of IBEX EAD The role and the place of IBEX on the energy market Years, months, weeks Day Ahead Hours, minutes Real time Day Ahead market Intraday market Balancing market Contract negotiation brokerage or CCP IBEX EAD Balancing of the PS ESO EAD Sofia

6 Panel I : Presentation of IBEX EAD Founding principles in conducting our activities A C T I О N Autonomy Autonomy and decisiveness in the participation in all the integration processes. Confidence Constant efforts towards the compensation of the delay in the organization and the structure of the power market. Transparency Equal and easy access to information. Independence Prevention from the influences over the power exchange operator from the part of any of the market participants. Objectiveness Claims resolution in objective way, prevention from market abuse. Non discriminations Equal barriers for entering the market for each market participant.

7 Panel I : Presentation of IBEX EAD IBEX and the regional power exchanges (1) Market zones operated with NORDPOOL trading platform. Market zones operated with EPEXSPOT trading platform. Market zones operated with GME trading platform. NORDPOOL Market zones operated with OMIE trading platform. Market zones operated with own local trading platforms. EPEXSPOT OTE EXAA OKTE HUPX Polpx OPCOM OMIE GME IBEX EPIAS

8 Panel I : Presentation of IBEX EAD IBEX and the regional power exchanges (2) OPCOM Activities started in 2004 and currently is a part of 4МС coupling project. Regional Power Exchanges SEEPEX CROPEX ADMIE IBEX Компенсиране на изоставането OPCOM EPIAS Стратегическо партньорство за БЕХ ЕАД EPIAS Successor of PMUM, official start of activities in Sept SEEPEX Joint venture between EMS and EPEX SPOT with planned Go-live date in Nov CROPEX Service agreement with NORDPOOL and planned Go-live date in Nov ADMIE The market model change to be conducted and then inclusion in the integration process.

9 Panel I : The partnership with NORDPOOL SPOT Need for partnership Prerequisites for the choice of а partner: Solution to the problem with substantial delay of the integration processes; Successful completion of the procedure against BEH EAD; Benefit from the experience of the most successful exchange markets in Europe; Opportunity for launching the power exchange in a timely manner. Compensation of the substantial delay Trust in the power exchange operator Important partnership for BEH EAD Rapid market integration NORDPOOL The largest power exchange operator in Europe The most experienced power exchange operator Europe - 20 years of experience. The vendor with the most economically advantageous offer for operating the power exchange in Bulgaria.. 9

10 Panel I : Partnership with NORDPOOL SPOT Advantages of the selected partner Benefits for IBEX Advantages of NORDPOOL Reliability of the solution, minimum risk. A Partnership A Experience in operating the power exchange and a leader in the integration processes. Following the proven experience in implementation of power exchanges. Flexibility and security in adapting the systems. B C IBEX & NPS B C Experience in establishment of power exchange markets in partnership with other operators, consultancy expertise. Own platforms, IT infrastructure. Relatively low financial burden for market participants and accumulation of investment capital. D D Relatively low price of the market operating service. 10

11 Panel I : Partnership with NORDPOOL SPOT Organizational parameters of the agreement(1) Responsibilities of IBEX Market Surveillance Processing the offers (MCP, MCV, EUPHEMIA) Responsibilities of NORDPOOL Market Development Technical Market Support Customer acquisition activities First line support of the market participants Settlement, risk management and invoicing 11

12 Panel I : Partnership with NORDPOOL SPOT Organizational parameters of the agreement (2) Consultancy part of the project Current phase of the project Structuring and organizational support of the PX operator Structure of the company Market organization Settlement decision Creating internal rules and procedures Exchange market rules Participation agreement Market training and testing Staff training Workshops and test with market participants Adapting Systems Adapting systems for operating on the exchange market Trading system Settlement and risk Test with real participants 12

13 Education and Experience Selected Project References Consultant Panel I: IBEX EAD market integration Hans-Arild has 20 years of experience from international projects in the energy sector based on his work with the Nord Pool model Hans-Arild Bredesen CEO, Nord Pool Consulting Mobile: hans-arild.bredesen@npspot.com Turkish Electricity market reform Advisor for WB in Bulgaria in the 2014 mission Implementing a Wholesale Market Opening for SEE (South East Europe) Author of Power to the People BSc in Computer Science from Høgskolen I Østfold, Norway Involved in the electricity deregulation process since Technical project manager for the market systems at Nord Pool Product manager for wholesale energy market participant systems for the Nordic market. Wide international experience from key roles in the development of strategies for trading, scheduling and settlement systems for PXs and TSOs in California, Ireland, India, Romania, Turkey, Ukraine, Southern Africa and South-east Europe. 1 3 Nord Pool Spot Confidential

14 Panel I: IBEX EAD market integration Nord Pool Spot operates the leading markets for buying and selling power in Europe: Elspot day-ahead market in the Nordic and Baltic regions Elbas intraday markets in the Nordic and Baltic regions N2EX market in the UK 370 companies from 20 countries trade on Nord Pool Spot s markets Our members are typically power producers, suppliers and traders as well as large end-users In 2014, 501 terawatt hours (TWh) were traded at Nord Pool Spot. The market share was 85% What is Nord Pool Spot София

15 Panel I: IBEX EAD market integration Our functions To provide liquid, secure power markets To provide accurate information to the whole market, ensuring transparency To provide equal access to market for everyone wanting to trade power To be the counterparty for all trades; guaranteeing settlement and delivery София

16 Panel I: IBEX EAD market integration Our functions PCR (Price Coupling of Regions) IBEX applied to become an Associated Member This will enable them to get full access to all information NPS will be running the Bulgarian market area as serviced PX from NPS MRC (Multi-Regional Coupling) IBEX and TSO to apply to become member Will be an observer until coupling with another MRC member No changes needed in Bulgaria until then but gives full access to all agreements and rules София

17 Panel I: IBEX EAD market integration European Market Coupling The EU Target Model for energy trading is based on one common algorithm in the day-ahead timeframe (gate closure at 12:00 for the next days 24 hours) and one shared order book in the Intraday timeframe. The progress for this is based on cooperation between 8 of the power market operators in Europe. The first stage of this went live in February Towards Single European Market: Next Steps София

18 Market Rules 18

19 Regulations, rules Market conduct rules Settlement rules Power exchange trading rules Electricity market rules Energy law 19

20 Power exchange rules Power exchange trading rules Terms of participation. Registration procedure. Withdrawal, removal and exclusion. Trade and products. Results determination. Settlement rules Collateral types. Determination of the collateral amount. Deadlines for settling liabilities. Release of collateral. Market conduct rules Information types. Providing information. Business ethics. Market manipulation. Investigation and procedures. 20

21 Registration Process 21

22 Activities Entry in the participants register Submission of the required collateral. Providing the already certified participants with username, temporary password and DigiPass. Training the market participants and certification Signing a contract with the market participant Consideration of the application by the power exchange operator. Submission of application by the market participant. 22

23 Customer advisory board Board of Directors Regulatory Authority Market Surveillance Market segments Intraday Market Day-ahead Market Bilateral Contract Market 23

24 Group 2 Group 1 Group N Customer advisory board (CAB) Representatives from different categories of members: Producers Traders Consumers Information Structure of the CAB The executive director of IBEX creates the CAB CAB has a limited number of members in order to enhance the discussion. The Chairman of the CAB is a part of the IBEX management Administrative activities inherent to CAB are performed by IBEX. Permanent and temporary working groups. The working groups present their results to the CAB. 24

25 Objectives and Role of the Advisory Board Role of the Exchange Council Exchange Council's decisions have the force of recommendations for IBEX which the exchange operator should take into account when making decisions Discussion of strategic objectives Establishing of working groups, permanent and temporary Set the agenda and method of operation of the working groups. Coordinate the objectives and results of the working groups. Select appropriate members of the working groups and determine the duration of their mandates Objectives of the Advisory Boаrd Improving communication between IBEX and market exchange members. Engaging participants in the exchange market in taking decisions about key issues. Finding decisions on key issues which are suitable for all participants. Creating a place where market participants will have the opportunity and obligation to participate actively. 25

26 Members, Selection and Organization Selection of the members of the Exchange Council IBEX will determine the number of the participants from the different categories IBEX will approve the members of the Council in order to achieve the best possible representation Two of the members are expected to be from IBEX to achieve better communication Half of the members will be approved for a period of two years and the other half for a period of one year Meetings of the Exchange Council It's planned to be held regular meetings, which will be determined in advance. Meetings will be held on a particular way, which will be sent to members in advance. It is envisaged that the agenda and the minutes of each meeting will be uploaded on the website of IBEX. 26

27 Panel I: Planned activities and deadlines Tariffs and prerequisites for starting 27

28 Panel I: Planned activities and deadlines Tariffs for participation in the spot market First option Value Second option A. Participation fee BGN B. Annual fee BGN/year C. Transaction fee BGN/MWh Компенсиране на изоставането D. Settlement fee Стратегическо партньорство за БЕХ ЕАД BGN/MWh A. Participation fee Entrance fee for membership B. Annual fee Fee in BGN that should be paid by MP to the exchange operator C. Turnover tax Fee in BGN/MW for any amount traded in the spot market. D. Settlement fee Fee in BGN / MW for each amount traded on the stock market securing clearing and settlement. 28

29 Panel I: Planned activities and deadlines Tariffs for participation in the exchange market (2) Power Exchange Market Zone Membership fee (EUR) Annual fee (EUR) Total volume based fee MW (EUR) OPCOM RO 100, ,00 0,045 SOUTHPOOL SL 7 500, ,00 0,070 EXAA AT , ,00 0,075 EPEX SPOT GE+AT+CH , ,00 0,055 EPEX SPOT FR , ,00 0,085 NORDPOOL 1 Scan.+Balt.+UK 0, ,00 0,045 NORDPOOL 2 Scan.+Balt.+UK 0,00 0,00 0,135 GME IT 7 500, ,00 0,040 HUPX HU , ,00 0,065 SEEPEX SR , ,00 0, Компенсиране на Стратегическо IBEX BG изоставането партньорство????????? за БЕХ ЕАД Deadline planned for the publication of tariffs in IBEX web site operator

30 Panel I : Planned activities and deadlines Measures to support the liquidity of the spot market Liquidity = Reference price = Attractive Market New market segments and services - "Intraday" market, REMIT reporting and more. Purchase energy required to cover technological losses of transmission and distribution of energy efficiency. Accelerating integration with neighbor market zones and with the great marketing coupling MRC through them. Agreements with trading members for purchase / sale of certain qualities in certain conditions. Low participation fees for two different structures, flexible policy on risk management - "One stop shop" conception. Компенсиране на изоставането Стратегическо партньорство за БЕХ ЕАД 30

31 Panel 1: Planned activities and deadlines Starting of the power exchange - prerequisites А B C D Start Rules Commitments PCR & MRC Successful test Changes in Electricity Market Rules and the initial version of the internal "Rules of organized power exchange" need to be approved Successful completion of a market test with real market participants. Signing of commitments to support the liquidity of the spot market. Компенсиране на изоставането Стратегическо партньорство за БЕХ ЕАД Starting of the power exchange with sufficient liquidity and transactions at all hours of delivery. Successful completion of the process of association of IBEX to organizations administrating integration processes in Europe - PCR and MRC. 31

32 Entering exchange market in Bulgaria Workshop: Independent Bulgarian Energy Exchange what, how and when? Panel 2: Platform, settlement and risk management 32

33 Introduction to the principles of spot market trading 33

34 Principals of Exchange trade Auction sessions Basic principles MCP, MCV, curves (D,S) Trading Deadlines for bidding EUPHEMIA Trading principles Компенсиране на изоставането Participation in the Spot market Стратегическо партньорство за БЕХ ЕАД Bidding, quote types Quotes parameters Central counter party IBEX s roles First line support market surveillance 34

35 Principles of exchange market auction session Компенсиране на изоставането Стратегическо партньорство за БЕХ ЕАД NORDPOOL Най-големия борсов оператор в Европа. Операторът с най-голям опит - 20г. Доставчика с икономически найизгодната оферта аз опериране на борсовия пазар в пазарната зона на България. 35

36 Principles of exchange trading - deadlines for submission and publication of results Starting date for submission of orders Final date for submission of orders Deadlines for announcing results Auction participants will have the opportunity to submit their orders for up to two weeks before the date of the auction Offers that are already submitted may be modified or deleted until 12:00 CET (13:00 EET) on the day of trading In accordance with the approved merger of PCR rules and procedures for tendering Компенсиране на изоставането offer GCT offer D S Auction Results offer Submission of orders Calculation of results Publication of results 36

37 Principles of exchange trading - clearing price (MCP), the demand curve (D) and supply (S) Price (lv./mwh) Demand curve(d) 2. Supply curve(s) 3. Clearing price(mcp) 4. Traded volume(mcv) MCP Стратегическо партньорство за БЕХ ЕАД Supply Demand Volume (MWh) MCV 37

38 Principles of the power exchange trade algorithm EUPHEMIA EUPHEMIA Meaning of the abbreviation EUPHEMIA Pan-European Hybrid Electricity Market Integration Algorithm Hybrid algorithm EUPHEMIA is an algorithm that represents two methods for calculation of cross border capacity Main purpose of EUPHEMIA EUPHEMIA calculates the transfer and prices of energy on the already united European markets. Calculating the results through EUPHEMIA Submission of orders and data from the TSOs Other goals of EUPHEMIA Maximizing the common welfare and increasing the transparency of price determination Publishing of results Unlimited possibilities The algorithm has no limit on the number of markets, orders, or network limitations that could be serviced 38

39 Principles of the power exchange trade stages of trade and schedule nomination Trade by CET Trade by ЕЕТ Stages of trade Up to 2 weeks in advance Компенсиране на изоставането Up to 2 weeks in advance Until 12:00 Until 13:00 Until 12:42 Until 13:42 Until 12:52 Until 13:52 Until 12:55 Until 13:55 Until 12:55 Until 13:55 Стратегическо партньорство за БЕХ ЕАД 1. Starting point for order submission up to two weeks prior to the deadline for submission of orders for the relevant auction 2. Deadline for order submission the orders are submitted, changed or cancelled until the Gate Closure Time (GCT) 3. Determination and publishing of preliminary results 4. Publishing of the official results of the relevant auction on the web site of the exchange operator. 5. Sending reports to the Market participants, containing information for the deals concluded by them. 6. Nomination of schedules to the TSO (ESO EAD) 39

40 Participation on the market offering, types of orders Buy and sell orders Buy order determines the maximum price, that the MP would pay for the given volume of electrical energy, he wants to buy Sell order determines the minimum price, that the MP would sell at for the given volume of electrical energy, he wants to sell Every offer is submitted for a given delivery interval The proposals are submitted up to the deadline for submission Every offer could contain up to 64 price-volume pairs. MP could submit only one offer for purchase or sale for each given interval The offers are a firm commitment for purchase or sale 40

41 Participation on the energy exchange parameters of the orders Each order should contain at leas two pairs price-volume, which include the highest and the lowest price, namely: BGN/MWh и 6000 BGN/MWh; All the orders entered into the trading platform are marked with entry time When entering the price-volume pairs the defined prices should be arranged by ascending order, and the volumes for a given hour in descending order. Parameters Example Day of trade Market participant Trader A Selection of interval (hour) of delivery 22nd interval/hour (21:00-22:00) Компенсиране на изоставането Стратегическо партньорство за БЕХ ЕАД Defining of volume for purchase/sale Input of sign, declaring the intention of the participant to buy or sell 20MW + for purchase; - for sale Defining of price for purchase/sale Minimal interval, volume Minimal interval, price 45,9 BGN/MWh 0,1 MWh 0,1 BGN/MWh 41

42 The role of IBEX participant in every deal Producers All the market participants willing to be part of the energy exchange should sign a Contract for participation with IBEX Compensating the falling behind Traders As a result of the transactions concluded on the power exchange, the trade schedules should be registered in the system for market administration of TSO, where parties on the trade would be the Market participants on one side and IBEX on the other IBEX as a Market operator is a counter party for each transaction concluded on the Day ahead market Consumers All the financial transactions are between IBEX and the respective counterparty (trader, producer or consumer) 42

43 The role of IBEX first line support IBEX mediator between MPs and Nord Pool Spot Contact point for the MPs Contact point for the Trade desk of NPS IBEX monitoring of the submitted bids IBEX responsible for the financial management, directly related with the market operation 43

44 Advisory Board Management Board Regulatory authority Market surveillance Market segments Intraday Market Day ahead Market Bilateral contracts Market София

45 Characteristics, functions and. Main characteristics Independent branch. Reports to the Management board. Works in cooperation with the Energy and Water Regulatory Commission. Refers the authorities in events of infringement. Main duties Monitors the market. Follows the compliance with the Market rules by the Market participants. Watches for market misconduct and market manipulations. Watches for the equality of the market participants in regard to the access to information. Equality Security Transparency Trust 45

46 Actions Suspected breach of rules Demand for detailed information Infringement No breach detected Advise to the Board of Directors for imposing proportionate sanctions Notification of the Regulatory and/or other authorities Imposing proportionate sanctions 46

47 Solution for settlement and Risk Management 47

48 Energy market Trade is conducted every day, with delivery on the next day. Trade is conducted on the basis of hourly deals, 24 for each Day of delivery. Basic characteristics of the power exchange The market operator is a counter party for each transaction. The transaction, concluded for a given delivery hour are subject to one and the same price clearing price. Anonymity of the market. 48

49 Basic principles and participants Basic principles followed when choosing the model Using the experience of NordPool Spot. Simplified model. Minimizing the expenses. Minimal risk. Flexibility in regard to the collateral and the opportunities for trade. Possibility for upgrade. Participants in the financial settlement of the power exchange exchange Independent Bulgarian Energy Exchange. Market participants, registered on the energy market. A commercial bank, chosen to serve as a focal point for the financial and informational flows related to the trade on the energy exchange. Commercial banks, where the market participants hold their accounts registered with IBEX for their financial transactions on the market. 49

50 Collateral Types of collateral Bank guarantees approved by IBEX. Amount paid into an account specified by IBEX. A combination of the above types. Main characteristics The amount of the collateral required is determined in BGN (Bulgarian lev). It is determined every banking day. It is calculated as the sum of the amounts paid for the net purchased volume of electrical energy from the energy exchange, VAT included, for the last six days. Minimal collateral. Trading Day(D-1 ) Sending a notification for the amount of collateral required for the next auction. Delivery Day(D ) Check for meeting the collateral requirements until 11:30. Day after the Delivery Day (D+1) MPs not meeting the collateral requirements are not allowed to participate in the market. 50

51 Transactions Main characteristics MPs are responsible for the timely and systematic payments of their liabilities, incurred as a result of realized deals on the energy market. The payments on the energy market are made on the basis of net sales and net purchases. The market participants shall pay their amounts due to IBEX until 11:30 on the first banking day after the Trading day, by transferring the amount due to the corresponding bank account. IBEX shall pay its liabilities to the net sellers on the second banking day, following the Trading Day, after deducting the amount of fees due to IBEX. Should a MP fail to comply with these rules: The MP is removed from the market. IBEX starts a procedure for claiming of the collateral of the respective MP. Trading Day(D-1 ) Sending a notification to the buyers for the amount of their liabilities Sending a notification to the sellers for the amounts the are due to receive Delivery Day (D ) - Receiving the amounts due from the buyers until 11:30. Day after Delivery Day (D+1) MP with outstanding liabilities are being sanctioned by removal from the market. Paying up the liabilities to the sellers. Sofia

52 The Model... IBEX Account (collateral) Account (current) Daily transactions One off transactions Day-by-day information Current account MP Bank Guarantee MP 52

53 The trading platform DA WEB Sofia

54 NPS Technology Platform NPS Platform Website + Extranet + SSO APIs ID DA Settlement Clearing & Risk UMM Analytics REMIT The summary of 20 years of operational experience Sofia

55 Day Ahead Auction Platform PCR Euphemia Algorithm PCR Co-ordinator role API EDIEL XML HTML 5 Web browser front end New Trading client Sofia

56 Login security enabled with DigiPass Sofia

57 Sofia

58 DA Web Dashboard Sofia

59 Dashboard Member Sofia

60 Order window with Bid validation Sofia

61 Detailed portfolio result Sofia

62 IBEX Result window Sofia

63 Online user guide Sofia

64 IBEX EAD