INTRADAY Market Coupling / Continuous trading combination proposal

INTRADAY Market Coupling / Continuous trading combination proposal

Description The proposal is : To run six times a day (one every four hours as an example) auction intraday markets based on market splitting/coupling to deal with cross-border congestions, trading all the hours remaining of the day ahead. To allocate the spare cross-border capacity, for the hours where there will not be another intraday auction market, in a continuous intraday market that allocates the cross-border capacity on a coordinated first come first served basis.

AUCTION MARKETS DAY-AHEAD MARKET MARKET ORGANIZATION LAST HOURS INTRADAY ALLOCATION RESULTS + Market Splitting/Coupling Day-Ahead Market Result 6 INTRADAY MARKETS INTRADAY FIRST COME FIRST SERVED CONTINUOUS COORDINATED ALLOCATION Intraday auction Market Result + Market Splitting/Coupling First come first served allocation results

EXAMPLE OF FIRST AUCTION INTRADAY TIMING FIRST INTRADAY MARKET HOURS NEGOTIATED BID RECEPTION FINISHES First Intraday Auction Market (28 Hours) BID RECEPTION STARTS 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 00

EXAMPLE OF FIRST COME FIRST SERVED ALLOCATION OPEN HOURS PRIOR TO THE FIRST INTRADAY AUCTION MARKET FIRST COME FIRST SERVED PERIOD (hours after 16 hour and up 20 hour) HOURS AVAILABLE FOR FIRST COME FIRST SERVED CONTINUOUS COORDINATED ALLOCATION 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 00

EXAMPLE OF FIRST COME FIRST SERVED ALLOCATION OPEN HOURS AFTER TO THE FIRST INTRADAY AUCTION MARKET FIRST COME FIRST SERVED PERIOD HOURS AVAILABLE FOR FIRST COME FIRST SERVED CONTINUOUS COORDINATED ALLOCATION 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 00

EXAMPLE OF SIX AUCTION INTRADAY NEGOTIATING HOURS First intraday market (28 hours) Second intraday market 2 (24 hours) Third intraday market (20 h.) Intraday 4 (17 hours) Intraday 5 (13 h.) Intraday 6 (9 h.) 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 00

Justification (I) Some systems have a very important percentage of thermal units and, for them, in order to start a unit during the day they need a reasonable assurance that they are going to obtain a viable schedule for the unit. The new Combined Cycle Gas Units, among other characteristics, have a fast startup time (in the order of a few hours) which makes them very adequate to solve intraday energy needs of other participants. Wind power production is becoming more and more important in many systems and the wind predictions are much more accurate closer to real time. For this kind of energy having liquid intraday markets is very important to update (buy or sell) the whole hourly remaining schedule for the wind farm at a market price.

Justification (II) While the day-ahead cross border congestion direction on a border in a very significant number of hours goes in the same direction as the explicitly auctioned capacity rights, and other forms of price risk coverage, intraday normally responds to new system or participant problems, like thermal plant failures, general mistakes in temperature predictions, mistakes or updates in wind predictions, etc.. therefore it could need flows in any direction. Day-ahead coupling mechanism will normally leave fully occupied the interconnections in the predicted economic direction, leaving the full capacity, and the netted capacity, in the other direction free to solve intraday participant s needs that require it. The commercial capacity published by the system operators prior to day ahead, without a precise knowledge of the power plant schedules, could possibly be improved after the day-ahead results are available since then they can rerun the security packages with totally precise data. The new capacity can be incorporated to the intraday markets.

Justification (III) After a number of years of discussions, the First come first served method of allocating the cross border capacity in the day-ahead horizon, has been abandoned. For intraday trading it seems to be a better proposal to use the market splitting/coupling also for some auction sessions during the day, and to leave the First come first served method of allocating capacity for the last hours, where coordinating different systems could be impractical. The liquidity in the experiences of continuous intraday markets with first come first served cross-border allocation seems to be bigger in the hours closer the negotiating moment, with this proposal we can obtain the advantages of both kinds of markets, a market splitting/coupling solution for hours not so close to real time and a continuous intraday market, trading closer to real time (next 4-6 hours).

Justification (IV) - The auction intraday markets can be introduced gradually. The number of sessions does not need to start being six, or any number, the method could start with a couple of sessions and add later more intraday auction sessions, according to participants needs.

Operation (I) The matching mechanism will work essentially in the same way as the day-ahead market, including the splitting/coupling mechanism. Since the market is closer to real time than the day-ahead market, and taking into account the possible needs of the participants, it could be advisable to offer the bidders a more complete set of complex or block conditions to be used in their bids.

Operation (II) It is possible for the same participant to send selling and buying bids for the same intraday session, if the session is cheap, he will buy, and if it is expensive he will sell (very useful for flexible participants) In order to be compatible with the secure operation of the system, and depending on the different systems characteristics, the possibility of accepting, prior to receiving the bids for the intraday session from the participants, limitations to bidders, or groups of bidders, from the system operator will improve the acceptance by system operators of the auction intraday market results. This is a real problem and if it is not handled in the market there will be a mechanism or procedure established by the system operator to solve the situation.