Summary of the ig discussion paper on the balancing in the baltics
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SUMMARY OF THE IG DISCUSSION PAPER ON THE BALANCING IN THE BALTICS. Aistija Zubaviciute, NCC Baltic Electricity Market Mini-Forum 23rd November 2006, Vilnius. SOME DATA IN THE BALTIC ELECTRICITY MARKETS. Consumption in 2005: EE – 7,5 TWh LV – 6,5 TWh LT – 8,4 TWh

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SUMMARY OF THE IG DISCUSSION PAPER ON THE BALANCING IN THE BALTICS

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SUMMARY OF THE IG DISCUSSION PAPER ON THE BALANCING IN THE BALTICS

Aistija Zubaviciute, NCC

Baltic Electricity Market Mini-Forum

23rd November 2006, Vilnius


SOME DATA IN THE BALTIC ELECTRICITY MARKETS

Consumption in 2005:

  • EE – 7,5 TWh

  • LV – 6,5 TWh

  • LT – 8,4 TWh

    Generation companies >5% in 2005:

  • EE – 1

  • LV – 1

  • LT – 3

    Market opening in 2005:

  • EE – 12% (2009 – 35%, 2013 – 100%)

  • LV – 76%

  • LT – 74%

    Independent suppliers in 2005:

  • EE – 0

  • LV – 7

  • LT – 20


LEGAL ACTS REGARDING BALANCING


DEFINITIONS

  • ESTONIA: Balance settlement means the settlement of electricity trades which have taken place during a specific hour

  • LITHUANIA: Balancing electricity means electricity which is consumed/not consumed by customers or generated/not generated by producers in derogation from the quantities of electricity planned in the schedules drawn up adhering to the Electricity Trading Rules approved by the Government or a body authorised by it


BALTIC TSOs ROLE

ESTONIA: TSO is responsible for national balance settlement

  • settles balance power between TSO and balance providers

  • settles balance power between TSO and other neighbouring countries

  • the final settlement is ready during 3 months

    LATVIA:TSO is responsible for system balancing and ensuring operational stability in the transmission system

  • performs balance settlement between TSO and those market parties having balancing agreement with TSO

  • has an open delivery agreement with a neighbouring system

    LITHUANIA: TSO carries out the national balancing function by providing uniform, non-discriminatory and competitive conditions for all market participants

  • settles balancing and regulation energy between TSO and other neighbouring countries

  • organizes regulation energy and reserve capacity auctions


PRICING

ESTONIA:

  • Reference price of balance energy – the selling or purchase price with system open supplier

  • Price of balance energy in system has to cover the following expenses of TSO:

    • any justified expenses incurred in the purchase of regulating capacity

    • any justified expenses incurred in connection with balance determination

    • any justified expenses incurred in connection with the purchase and sale of balancing energy

    • ensure justified profitability

      LATVIA:The methodology has not been officially elaborated yet

      LITHUANIA:

  • Reference price of balance energy – the selling or purchase price with open balancing energy supplier or/and regulation energy auction price

  • Balancing energy price is market based price


PRICING FORMULAS


EXAMPLES OF IMBALANCE PRICES

Notes:

  • Period 01.10.2006 – 31.12.2006 for Latvia;

  • Period 01.09.2006 – 31.12.2006 for Lithuania (It could change till the end of year).


ADVANTAGES&DISADVANTAGES

ESTONIA:

  • it should be discussed in the meeting

    LATVIA:

  • no comments

    LITHUANIA:

  • the method applied in the national market is based on the classical scheme used in the most countries of the Western Europe.

  • there are possible some corrections on the imbalance coefficients in relation with the bilateral agreement between Russia and Lithuania


PRESENT STATUS OF CONTRACTS

  • Bilateral agreement between EE and LV >> LV and RU

  • Bilateral agreement between LT and RU >> LT and RU (there is a contract between LT and LV, but not activated)

  • Such system works quite well – are there any other options? - Yes


MODELS DESCRIBED IN ETSO REPORT

  • No trading, except emergency – traditional model

  • Cross-border Reserve Pooling – has been used in Nordel

  • Cross-border Reserve Trading – open to reciprocity

    • Reserve capacity payment and the exclusive right to use the reserve (Germany)

    • Only based on energy payment (France)

  • Sharing of Reserve Capacity (no exclusive right to use their own share of the common reserve) – present model in Nordel


CHARACTERISTICS OF TECHNICAL MODELS

  • Models 2 and 4 imply some form of balancing mechanism integration and require product harmonization

  • Models 2 and 3 may reduce long term reserve margins

  • Model 4 enables full integration of balancing mechanisms (centralization) and may reduce reserve margin reguirements, however when applied over a vaster area may be restricted due to transmission bottlenecks


EVALUATION BY ETSO REPORT

Challenges:

  • Product compatibility

  • Differences in price structure/incompatible product values

  • Differences in procurement position of TSOs

    Consequences of cross-border trade of Tertiary Reserves:

  • Change in procurement costs for TSOs

  • Potential decrease or reserve margins in the long term

    Prefered conditions:

  • Sufficient competition

  • Transparency

    A key element for an efficient market is right pricing of products, also needed a Balance Management Reference Model


OPTIONS?

  • Improved bilateral contract market

    • All Baltic countries have a possibility to buy the balance energy from each other

    • A possibility to buy from other countries than the Baltic region

    • Coordinated balance towards other countries

  • Common Baltic reserve and regulation power market


WHAT IS NEEDED?

If Common Baltic reserve and regulation power market

1 stage

  • Setting main principles and procedures for RRPM

  • Princing concepts

  • The creation of Baltic Operational System (BOIS)

  • Disturbance (emergency) reserve market only

    2 stage

  • Pricing concepts adaptation for regulation power market

  • The adjusting of BOIS for regulation power trade

  • Disturbance (emergency) reserve and regulation energy market

  • Balancing pricing


THANK YOU!

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