Technical Assistance to support the AFUR

Transcription

1 This project is funded by the European Union Technical Assistance to support the AFUR REGULATION FOR EMERGING ELECTRICITY MARKETS IN AFRICA 6-8 DECEMBER 2016 CROSS-BORDER TRADING OF ELECTRICITY EUROPEAN EXPERIENCES ANDERS PLEJDRUP HOUMØLLER, AETS SHORT-TERM EXPERT Contract N 2012/ CONSORTIUM LED BY 1

2 How can you move towards a regional electricity market? It is all about cross-border trading! Without cross-border trading, no common market This is true for any commodity. Therefore, we must focus on cross-border trading. 2

3 Europe For large parts of Europe, we have a common electricity market. Therefore, we ll first discuss the European electricity market. 3

4 The program The European electricity market. The road to a regional electricity market. Concerning the European case Please refer to the article The Liberalized Electricity Market. You ll find the article at the sub-page Facts and findings at 4

5 Electricity market: transportation system European Union... Transmission System Operator (TSO) Distribution System Operators (DSOs) (the grid part of the former distribution companies) Producers Consumers Transmission Grid Denmark: above 110 kv Distribution Grid Denmark: below 110 kv 5

6 Commercial and non-commercial players Before liberalisation Power stations and transmission grid Non-commercial monopolies Unbundling Distribution companies: local grid and retail Competition authority Commercial players After liberalisation Regulator TSO: transmission grid and security of supply DSO: Distribution System Operators Producers, retailers, traders, brokers

7 Transmission System Operator (TSO) European Union The TSO is a non-commercial monopolist. In the European Union, each TSO has two tasks: Maintains the security of supply in the TSO s home country. Owns and operates the transmission grid (the high-voltage grid) For example, this means the TSO is responsible for setting the rules for the cross-border trading regime. Most EU countries have only one TSO. However, a few EU Member States have more than one TSO. 7

8 The Electricity Market Producers 50 Hz Consumers EU: the grid is financed by grid fees paid by domestic electricity consumers and electricity producers 8

9 A look at Europe France Germany Poland 9

10 Multinational trading 1 Case: ship energy from France to Poland Assume you are a French producer. In order to do this, you must establish subsidiaries in Germany and Poland, respectively. Your subsidiaries must conform with all the requirements to a player at the whole-sale market in Germany and Poland, respectively. Buy cross-border capacity at the French-German border. Buy cross-border capacity at the German-Polish border. France Germany France-German border: sell in France, buy in Germany. German-Polish border: sell in Germany, buy in Poland. Poland Sell energy in Poland The auctions of cross-border capacity are operated by the TSOs. 10

11 Multinational trading 2 Case: ship energy from France to Poland This system eschews issues of national sovereignty. The countries need only agree on the auction systems for the cross-border capacity. Multinational dispute resolution concerns only the cross-border access. France Germany Poland Question: why no wheeling tariffs? Answer: the grid was built for domestic purposes! For example: the German grid was built for Germans (not for Germany s neighbours). 11

12 Integration of electricity markets First step: in each of the two countries, there is an incumbent. The two incumbents trade with each other (bilateral, cross-border trade). Second step more competition in both countries: more market players in both countries. Now there are many market players, who want cross-border capacity. How to grant the capacity? The two TSOs run an explicit auction system, where the market players can buy cross-border grid capacity. After having bought cross-border capacity, the market players can trade across the border. Third step: an electricity exchange in both countries. You establish market coupling or market splitting. Country 1 TSO 1 Country 2 TSO 2 12

13 Cross-border trade development 1 CACM cross-border Capacity Allocation and Congestion Management No unbundling in A and B. No electricity exchange. Only one electricity company in each country: E A and E B. CACM system: the two incumbents simply trade with each other. Probably, transmission charges will not make sense As E A and E B would simply charges themselves. Country A E A Interconnector L E B Country B 13

14 Cross-border trade development 2 CACM cross-border Capacity Allocation and Congestion Management Unbundling in A and B. No electricity exchange in A and B. Country A TSO A and TSO B are the two TSOs. A number of commercial players in TSO A each country: C 1A C 2A C NA C 1A, C 2A, C 1B, C 2B, CACM method: explicit auction. The transmission charges may be the TSO B revenue from the explicit auctions. C In addition to this, the grid may be 1B C 2B C MB financed by grid fees paid by domestic Country B grid users The grid fees help finance both interconnectors and domestic grid. 14 Interconnector L

15 Cross-border trade development 3 CACM cross-border Capacity Allocation and Congestion Management. EX: Electricity exchange Unbundling in A and B. electricity exchange in A and B. TSO A and TSO B are the two TSOs. A number of commercial players in each country: C 1A, C 2A, C 1B, C 2B, CACM method: market coupling. Market coupling may be combined with explicit auction. Country A EX TSO A C 1A C 2A C NA Interconnector L TSO B EX C 1B C 2B C MB Country B 15

16 Cross-border trade development 4 CACM cross-border Capacity Allocation and Congestion Management. EX: Electricity exchange The transmission charges may be the congestion revenue Plus revenue from explicit auctions, if there are also explicit auctions. In addition to this, the grid may be financed by grid fees paid by domestic grid users The grid fees help finance both interconnectors and domestic grid. Country A EX TSO A C 1A C 2A C NA Interconnector L TSO B EX C 1B C 2B C MB Country B 16

17 Cross-border trade development 5 No unbundling. No electricity exchange. Only one electricity company per country. Unbundling. No electricity exchange. A number of commercial players in each country. Unbundling. electricity exchange(s). A number of commercial players in each country. 17

18 Thank you for your attention! Anders Plejdrup Houmøller 18