Network Code on Capacity Allocation Mechanism – NC CAM Commission Regulation (EU) 2017/459 Johannes Lambertz – Regulatory Affairs Kiev, 5th December 2019
Contents 2 1. Legal basis and development 2. Subjects of NC CAM 3. Wrap-up MGU Workshop | Kiev | 5.12.2019
3 Legal basis and development MGU Workshop | Kiev | 5.12.2019
Legal Basis and Development 4 3rd EU Package (2009) EU-COM Directive 2009/73/EC Regulation EC 713/2009 Regulation EU 715/2009 Rules for the internal market Establishing ACER Access conditions Framework Guidlines on Framework Guidelines Framework Guidelines on ACER Capacity Allocation Interoperability and Data on Gas Balancing Mechanisms Exchange Rules (03.08.2011) (26.07.2012) (18.10.2011) Network Code on Capacity Network Code on Gas Network Code on ENTSOG Allocation Mechanisms Balancing Interoperability and data (first version: 14.10.2013) exchange (26.03.2014) (latest version: 16.03.2017) (30.04.2015) MGU Workshop | Kiev | 5.12.2019
Legal Basis and Development 5 Roles and responsibilities in NC development process ▪ European Commission : Sets priorities ▪ ACER : develops Framework Guidelines (FG) defining scope and objective ▪ ENTSOG: develops NC in line with FG ▪ Network users/stakeholders : Involved via consultation ▪ ACER : Checks NC on consistency with FG and gives recommendation to EC ▪ EC : Adopts the NC ▪ Member States : Final vote via comitology process MGU Workshop | Kiev | 5.12.2019
Legal Basis and Development 6 MGU Workshop | Kiev | 5.12.2019
Legal Basis and Development 7 MGU Workshop | Kiev | 5.12.2019
8 Subjects of NC CAM Commission Regulation EU 2017/459 MGU Workshop | Kiev | 5.12.2019
Subjects of NC CAM 9 1. General Provisions 2. Principles of Cooperation 3. Allocation of Firm Capacity Products 4. Bundling of Capacity at Interconnection Points 5. Incremental Capacity Process 6. Interruptible Capacity 7. Capacity Booking Platforms 8. Final Provisions MGU Workshop | Kiev | 5.12.2019
Subjects of NC CAM 10 1. General Provisions 2. Principles of Cooperation 3. Allocation of Firm Capacity Products 4. Bundling of Capacity at Interconnection Points 5. Incremental Capacity Process 6. Interruptible Capacity 7. Capacity Booking Platforms 8. Final Provisions MGU Workshop | Kiev | 5.12.2019
General Provisions and Principles of Cooperation 11 General Provisions ▪ ▪ Subject matter: Scope: • Interconnection points • Standardized capacity allocation mechanisms • Firm and interruptible capacity • Including auction procedures Principles of Cooperation ▪ ▪ Coordination of maintenance: Capacity calculation and maximisation • Offer of the maximum bundled capacity • Compulsory cooperation to avoid reductions in capacity offers • Standardisation of communication: • In particular to/with booking platform MGU Workshop | Kiev | 5.12.2019
Subjects of NC CAM 12 1. General Provisions 2. Principles of Cooperation 3. Allocation of Firm Capacity Products 4. Bundling of Capacity at Interconnection Points 5. Incremental Capacity Process 6. Interruptible Capacity 7. Capacity Booking Platforms 8. Final Provisions MGU Workshop | Kiev | 5.12.2019
Allocation of Firm Capacity Products 13 Standard capacity products: ▪ ▪ Yearly: Monthly: • 1 month ahead • Gas year (October – October) Auction: 3 rd Monday of each month • • 5 to 15 years ahead Auction: Once a year (1 st Monday of July) • ▪ Daily: • 1 day ahead ▪ Quarterly: • Auction: 15:30 till 17:00 (UTC) Start of auction Number of auctioned quarters ▪ Within-day: 1st Monday of August 4 ▪ Rest of the day product 1st Monday of November 3 1 st round closes at 1:30 (UTC) last ▪ 1st Monday of February 2 1st Monday of May 1 round closes at 0:30 (UTC) ENTSOG Auction calendar : https://www.entsog.eu/en/index/index/module/search?q MGU Workshop | Kiev | 5.12.2019 =calendar
Allocation of Firm Capacity Products 14 Reservation quotas ▪ Period ≤ 1year: 100 % of available capacity bookable ▪ Period > 1 year: 90 % of available capacity bookable ▪ Period > 5 years: 80 % of available capacity bookable MGU Workshop | Kiev | 5.12.2019
Allocation of Firm Capacity Products 15 Ascending clock algorithm ▪ Yearly, quarterly and monthly products ▪ Publication of auction details according to the auction calendar ▪ Number of bidding rounds depends on the demand of all participating shippers ▪ Bids are placed at a given price ( → submission of an amount of capacity) ▪ The price steps of the auction are set by the TSOs Uniform price auctions ▪ Day-ahead and within day ▪ Publication of the auction with the start of the auction ▪ One bidding round ▪ Bid = combination of capacity amount and surcharge ▪ TC can place up to 10 bids per auction MGU Workshop | Kiev | 5.12.2019
Allocation of Firm Capacity Products 16 Ascending clock algorithm ▪ Sum of all placed bids in the bidding round is higher than the available capacity (oversell) → the auction continues with the next bidding round ▪ A large price step is applied and shipper can place bids at the new price ▪ If the total demand of all placed bids in the bidding round is equal to the available capacity: capacity contracts are concluded ▪ The clearing price of the auction in this example is P2 (Regulated Tariff + 2 large price steps) MGU Workshop | Kiev | 5.12.2019
Allocation of Firm Capacity Products 17 Uniform price algorithm ▪ Day-ahead and within-day ▪ Bid = combination of capacity amount and surcharge price Minimum amount ▪ Bids by all shippers are evaluated in a descending available capacity order according to the willingness to pay ▪ Allocation of capacity is done after the bidding round clearing price is closed G1 G2 ▪ The lowest surcharge of all successful bids is G3 G4 considered the clearing price G5 ▪ Depending on the received bids the clearing price is amount determined by either the fill-or-kill procedure or the pro-rata procedure MGU Workshop | Kiev | 5.12.2019
Allocation of Firm Capacity Products 18 Uniform price algorithm – Detailed example ▪ Day-ahead ▪ 500 unit available MGU Workshop | Kiev | 5.12.2019
Subjects of NC CAM 19 1. General Provisions 2. Principles of Cooperation 3. Allocation of Firm Capacity Products 4. Bundling of Capacity at Interconnection Points 5. Incremental Capacity Process 6. Interruptible Capacity 7. Capacity Booking Platforms 8. Final Provisions MGU Workshop | Kiev | 5.12.2019
Bundling of Capacity at Interconnection Points 20 Bundled capacity products ▪ Jointly offered by adjacent TSOs OGE Adjacent Available firm TSO ▪ Joint nomination procedure shall be established capacity unbundled ▪ Bundled capacity can only be resold as bundled capacity ▪ Capacity overhang on one side is offered as firm bundled unbundled capacity ▪ Establishing of virtual interconnection points (VIP) MGU Workshop | Kiev | 5.12.2019
Bundling of Capacity at Interconnection Points 21 Establishing of virtual interconnection points – two (or more) IPs connecting the same E/E-system ▪ ▪ Two separate bundled products at both IPs One bundled product at VIP Bundled Product at IP 1 IP 1 IP 1 Bundled VTP 1 VTP 2 VTP 1 VTP 2 Product at VIP IP 2 IP 2 Bundled Product at IP 2 MGU Workshop | Kiev | 5.12.2019
Bundling of Capacity at Interconnection Points 22 Bundling of contracted capacity ▪ Network users holding unbundled capacity OGE Adjacent Available firm TSO capacity products on both sides of an IP shall make best available efforts to bundle it ▪ Capacity conversion mechanism Corresponding booked available ▪ Conversion from unbundled to bundled capacity cannot unbundled be booked capacity ▪ Acquisition of bundled and simultaneous booked return of (old) unbundled ▪ Free of charge ▪ Yearly, monthly, quarterly MGU Workshop | Kiev | 5.12.2019
Subjects of NC CAM 23 1. General Provisions 2. Principles of Cooperation 3. Allocation of Firm Capacity Products 4. Bundling of Capacity at Interconnection Points 5. Incremental Capacity Process 6. Interruptible Capacity 7. Capacity Booking Platforms 8. Final Provisions MGU Workshop | Kiev | 5.12.2019
Incremental Capacity Process 24 Let‘s skip the process for now MGU Workshop | Kiev | 5.12.2019
Subjects of NC CAM 25 1. General Provisions 2. Principles of Cooperation 3. Allocation of Firm Capacity Products 4. Bundling of Capacity at Interconnection Points 5. Incremental Capacity Process 6. Interruptible Capacity 7. Capacity Booking Platforms 8. Final Provisions MGU Workshop | Kiev | 5.12.2019
Interruptible Capacity 26 Yearly, quarterly, monthly products Within-day products ▪ ▪ Optional offer Obligatory offer ▪ ▪ Conditions. Firm capacity is: Only offered if firm capacity is sold out → Allocated via over-nomination procedure a) Sold at an auction premium b) Sold out c) Not offered DA products With the exception of within-day interruptible ▪ capacity, all dates for interruptible capacity Obligatory offer auctions shall be detailed within the auction ▪ Conditions. Firm capacity is: calendar a) Sold out b) Not offered → Allocated via auction process MGU Workshop | Kiev | 5.12.2019
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