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Cross Border Balancing – 2 Hour Product Considerations

Cross Border Balancing – 2 Hour Product Considerations. Summary of Existing CBB Interim Arrangements. Under the current CBB Interim arrangements :- Trades are utilised for Energy; Margin & Constraint purposes Majority of the ‘non-ramp’ trades deliver across 2 adjacent hourly periods or longer

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Cross Border Balancing – 2 Hour Product Considerations

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  1. Cross Border Balancing – 2 Hour Product Considerations

  2. Summary of Existing CBB Interim Arrangements • Under the current CBB Interim arrangements :- • Trades are utilised for Energy; Margin & Constraint purposes • Majority of the ‘non-ramp’ trades deliver across 2 adjacent hourly periods or longer • In the UK CBB transactions avoid real time commitment of 4hr or 6hr BMU alternatives • Availability of CBB in forward plans reduces contingency warming costs i.e. typically £20k-£30k per requirement • Alternative BM actions are costly e.g. locational BMU replacement typically costs in excess of £250/MHh • Existing CBB provides a cost effective solution for short duration demand peak periods (see example)

  3. Example of a Short Run Generation Requirement Generation Requirement SynchronisedGeneration Demand Market Position

  4. Breakdown of CBB Transactions in 2010 Agreed Transactions : 1st Jan – 20th Mar 2010 >1 hr or Straddled Ramps 33% 51% 12% BALIT Type 4% Others

  5. Summary of 2 Hour Product Benefits • A 2-hour CBB product would overcome the concerns of using BALIT to resolve ‘on-the-hour’ demand peaks. • With the suggested timescales – up to 2hrs ahead of delivery start – it will offset other plant commitments with typical costs in excess of £100k per run • In conjunction with the 1 Hr BALIT product it provides a more comprehensive portfolio to manage energy & system balancing across the daily load cycle • Without a 2-hour capability National Grid would have to secure the risk periods (i.e. demand peaks) via alternative pre-gate and post-gate actions thereby reducing the opportunity to fully utilise the CBB facility

  6. Proposed Way Forward • Arrangements for a 2 Hour product exchange should be included alongside the BALIT mechanism at Go-Live • If based on a simplistic pricing structure it can be implemented via the existing contractual arrangements – avoids major changes • It should have minimal impact on BALIT at Go-Live – • only National Grid & RTE participating • French & UK BM risks can be managed through pricing strategies • Proposal that a 2hr capability is included alongside BALIT for at least 1 year after Go-Live – the on-going benefits / disbenefits should then be assessed

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