1. Interconnector reliability should be considered probabilistically - PowerPoint PPT Presentation

1. Interconnector reliability should be considered probabilistically Zero probability of 100% probability of coincident stress coincident stress Real world – derate IC provides security IC cannot provide IC based on to both countries security to either probabilities 1 frontier economics DRAFT

2. X-border capacity can be valuable to more than one system  Generator provides security in France  Can help Spain & Portugal if low probability of coincident stress  Same principle with other neighbours 2 frontier economics DRAFT

3. Interconnector vs. generator participation is not about value, but may be about practicality  Neighbouring generator simple  Generator from other side of continent helps security, but how much…?  Political difficulties 3 frontier economics DRAFT

4. The nature of obligations on x-border capacity can be complex  Need to define what is GENERATOR PARTICIPATION Increasing paid for – availability or certainty over IC exports contribution to delivery G G adequacy generates generates  Availability is not enough for security G bids G bids G bids  But delivery implies G available G available G available G available interconnector must flow “Availability” “Delivery” IC PARTICIPATION - no one party controls this IC exports  Greater uncertainty while IC IC intraday markets not available available coupled & liquid “Availability” “Delivery” 4 frontier economics DRAFT

5. Co-ordination of markets would be ideal – but it is not obvious how to get there… The ideal… Reality …  Co-ordinated auction  National arrangements  Demand curves & resources  Mix of designs, obligations, from various countries timing  Simultaneous clearing  No co-ordinated assessment of probability of coincident  Cheapest resources provide stress required capacity Cheapest resources meet Outcomes function of adequacy needs multiple (non-cost) factors 5 frontier economics DRAFT