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“How to do intraday capacity pricing in a continuous trade environment?” Input for discussion

10 October 2011 . “How to do intraday capacity pricing in a continuous trade environment?” Input for discussion. Karri Mäkelä, km@npspot.com. Current situation. Historically the need for ID capacity pricing in Nordic Countries have not existed Seldom capacity updates for congested links

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“How to do intraday capacity pricing in a continuous trade environment?” Input for discussion

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  1. 10 October 2011 “How to do intraday capacity pricing in a continuous trade environment?”Input for discussion Karri Mäkelä, km@npspot.com

  2. Current situation • Historically the need for ID capacity pricing in Nordic Countries have not existed • Seldom capacity updates for congested links • Minor area of the interest • Principle have been to maximize the ATC to the Day Ahead market • Current solution in the Elbas market is based on first come first serve principle • Congestion revenue delivered to one party of each trade • Not optimal principle • Nord Pool Spot don’t have any official position for or against of ID capacity pricing 2 Nord Pool Spot Nord Pool Spot

  3. ID capacity pricing • Increase of the capacity leads into a global optimization problem • Publication of any ID capacity value should be coordinated in the whole market area • Should recalculation of capacity be connected to re-allocation of flows? • Transparency: Equal opportunity for all market parties to react on new information: Lead time before additional capacity is activated to the market? 3 Nord Pool Spot Nord Pool Spot

  4. Pricing principle, continuous trading • Periodical • Determined by the market parties • Hybrid solution of auction and continuous trade • Day Ahead as reference • Determined by TSO’s based on forecasting of the market condition • Dynamical • Continuous pricing of capacity 4 Nord Pool Spot Nord Pool Spot

  5. Pricing principle, continuous trading • In the day ahead market global optimal solution is created by calculating area prices and flows between areas. >90% market is priced in the DA. • Difference between area prices creates foundation for the value of the scare capacity • No need to create complex pricing methods for congestion revenue to the intraday markets • Could DA function as the price setter for intraday? 5 Nord Pool Spot Nord Pool Spot

  6. Pricing principle, continuous trading • In the case congestion appears in the day ahead market but TSO’s can release additional capacity to ID • Capacity prices are fixed to be the same as in DA • In case congestion appears in the intraday market but TSO’s can release additional capacity : • Zero price • In case of adverse trade increases congested connection: • Zero price 6 Nord Pool Spot Nord Pool Spot

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