Flow-based Allocations

Mini Forum Central Western REM

June 20th, 2006

Pursuing the Optimum. Two Paths

Unilateral Auctions

Bilateral Auctions

Multilateral Auctions

Market Coupling

Unilateral ATC assess.Coordinated ATC assess.

Technical Profiles

Flow-Based

When dealing regional capacity allocations, a maximised social welfare can be reached through two different paths:market coupling first (sharing energy bids) flow-based modelling first (optimal use of the system)

Sharing bids

path #1

Gri

d m

od

els

path #2

ETSO Vision on Achieving the Optimum

Effective and timely use of available data by TSOs, includingregulatory and market frameworks which

facilitate free and confidential data exchangesaccess to relevant data from market

participantsefficient data exchanges between TSOs

Progressive development of the ETSO regional flow-based transmission model

What is the Flow-Based Model?

An improvement of the NTC/profiles concepts, supporting regional auctions (explicit or implicit),

complying with new CM Guidelinesa highly meshed grid

Elaborated by TSOs, based on a reference state of the power system

What is the Flow-Based Model? cont.

Adding more accuracy (=security)preserving the zonal/hub modelreducing the impact of wrong predictionsincreased but moderate volume of data

to be exchanged by TSOs

Step-by-step implementation possibletechnical dry-run implementationdecentralised / centralised

Theoretical Comparison of Models

Flow based modeling maximises the security domain allowing for more cross-border trade opportunities

A=>C

A=>B

flow-based

Security domain

Coordinated ATC

assessment max(A=>B+A=>

C)Coordinated Technical profiles

assessment

BA

C

100

160

170

Heading for Some Cultural Changes?

Reaching the limits of TSO subsidiarityPolitical will and compatible regulatory

frameworks are both requiredsupporting free and confidential exchange of data between

TSOssupporting a single set of regional capacity allocation Rules

Using a regional flow-based transmission model means that…all capacity (explicit) or energy (implicit) bids are

simultaneously cleared the market will find its most efficient XB trades by itself

no more sub-optimal ex-ante sharing of fixed NTCscongestion income is shared on a regional basis

What Roadmap for the Region?

Integrating the national wholesale markets in this region should be seen as the priorityCentral Western REM > 50 % of the IEM interconnected to all other REMs

Local initiatives should always be supported implementation of market based mechanisms since end

of 2005 on all interconnections implementation of Trilateral Market Coupling in 2006

What Roadmap for the Region? cont.

A common regional allocation of capacities through the integration of all spot markets as the natural next step in the region …and beyond!

Aiming at the optimum thanks to the development of an underlying flow-based transmission model as the final target

ETSO ‘Flow-based’ Publications

‘List of data European TSOs need to pursue optimal use of the existing transmission infrastructure’, December 2005

‘FMC-Flow-based Market Coupling’, September 2004

‘Cross-Border Electricity Exchanges in Meshed AC Power Systems’, April 2004

‘Coordinated Congestion Management, an ETSO Vision’, April 2002

www.etso-net.org