power exchange prerequisites, planning and key price drivers - PowerPoint PPT Presentation

 IBEX perspective on setting up a power exchange – prerequisites, planning and key price drivers En.trading 016 - Tirana

Prerequisites for PX establishment What everything was based on. Legal and organizational environment on the Bulgarian power market. The IBEX project scope What we have had to do? Concept and preliminary decisions. IBEX and the Project launch regional power Milestones, goals and strategic decision taken. markets Компенсиране Стратегическо на Project accomplishment and Go-live партньорство изоставането Customer acquisition process, Dry run, statistic за БЕХ ЕАД results and price drivers. IBEX in development PX development, new market segments and the integration process. En.trading 016 - Tirana

Prerequisites for PX establishment What everything was based on. Preconditions. Political support, competent personnel and plenty of enthusiasm. Further process of deregulation and market liberalization resulting in reduction of the regulated market share up to 40% of the total consumption (end of 2015). Cross border explicit allocation of the available capacities , where there is a common rules for allocation on the Serbian, Romanian and Greek borders and 50/50 allocation on the Turkish and Macedonian borders. Functioning balancing market administered by the TSO, with hourly prices for surplus and deficit. Functioning bilateral contracts market , administered by the TSO (hourly nominations), with more than 50 active licensed energy traders and 10 generators, as well as more than 3000 industrial consumers (end of 2014) on the free market, all organized in the Balance Groups. Electricity Market Rules defines all the framework for the electricity market organizations, the activities of the PX Operator, the balancing market, the balancing groups organization and all the contractual relations between the market participants. Energy law provisions defining the license for the “organized power exchange market” and referring all the market organization to the Electricity Market rules. En.trading 016 - Tirana

The IBEX project scope (1) What we have had to do Years, months, Day Ahead Hours, minutes Real time weeks Day Balancing Intraday Ahead market market market Balancing of the PS IBEX EAD – DAM, ID and part of the BC on ESO EAD the OMP (organized market place) En.trading 016 - Tirana

The IBEX project scope (2) IBEX role on the energy market Minimal risk of acts of market power Setting a Conditions clearing price for a greater for the transparency market area Power of the market exchange market Organized electricity market on which trading is Conditions done day ahead for a Options for (D-1) competitive optimization and of the TP transparent portfolio market Encouraging environment entry of new market participants En.trading 016 - Tirana

The IBEX project scope (3) The market concept The power exchange operator organizes The power exchange operator is a a market for electricity, on which a counterparty to all transactions reference price is formed for each concluded on the day ahead delivery hour market(CCP) The power exchange operator bears all The power exchange operator the risk stemming from the financial monitors the market and notifies in relationships between TP case of market abuse or acts of market power GENERATORS CONSUMERS TRADERS En.trading 016 - Tirana

The IBEX project scope (4) Strategic decisions to be taken Partnership ??? Requirements Potential benefits Experience in operating Reliability of the the power exchange solution, minimum A A and a leader in the risk integration processes Following the Experience in proven setting a PX experience in markets in B B implementation partnership Provider of power with other IBEX Service exchanges operators, & consultancy expertise Flexibility and security in C C adapting the Own platforms, systems IT infrastructure, PCR compatible Relatively low financial D D Relatively low price of burden for market the market operating participants and service accumulation of investment capital En.trading 016 - Tirana

The IBEX project scope (4) Organizational concept of the PX Responsibilities of Responsibilities of the IBEX Service Provider Processing the offers (MCP, MCV, Market EUPHEMIA) Surveillance Technical Market Market Support Development “First line” Customer support of acquisition the market activities participants Settlement, risk management and invoicing En.trading 016 - Tirana

Project launch and key milestones (1) Development milestones of the Power Exchange 10.01.2014 г. 01.06.2014 18.05.2015 Incorporation of the Launch of the selection Launching the process “Independent process for the vendor of association of IBEX Bulgarian Power of the service for to the European Exchange” EAD as a operation of a power organizations governing 100% owned by BEH exchange market. the integration process EAD subsidiary. - PCR, MRC May Jan. January March June April 2015 2016 2014 2014 2014 2015 21.04.2015 31.03.2014 19.01.2016 Finalization of the Obtaining the license Go - live of the Bulgarian selection and negotiation for “ Organizing the Power Exchange processes. Service power exchange IBEX become full member of agreement signing with market ” from the MRC , associated member of NORDPOOL AS. EWRC. PCR and NEMO En.trading 016 - Tirana

Project launch and key milestones (2) Regulations, rules  Market Conduct Rules  Settlement Rules  Operational Rules for Organized Power Exchange  Electricity Market Rules  Energy Law En.trading 016 - Tirana

Project launch and key milestones (3) Primary goal – higher liquidity. Strategic decisions Liquidity = Reference price = Attractive Market  New market segments and services – ID (Intraday) market, centralized market for bilateral contracts and REMIT reporting service.  Accelerating integration with neighbor market zones based on the MRC and PCR compatibility.  Regulatory initiatives and steps towards TSO, DSOs (losses) and RES inclusion on the PX.  Arraignments for liquidity provision supporting the initial phase. Стратегическо Компенсиране партньорство на за БЕХ ЕАД изоставането  Low participation fees with two different structures, flexible policy on risk management - "One stop shop" conception. En.trading 016 - Tirana

Project launch and key milestones (4) Organization of the trading and settlement processes Net buyers Net seller obligation Market results Invoicing Bidding payment settlement The ETS allows Invoices issuing MCP publication Deadline for offering up to 2 Deadline for payments and portfolio towards the net payment for the net weeks prior to D day towards the net sellers. allocation (PCR) buyers buyers D D + 1 D - 1 13:00 10:30 10:30 14:30 15:00 16:00 12:00 12:55 D-14 CET CET CET CET CET CET CET CET GCT Nomination Collateral Collateral call adjustment Bidding process Nomination of gate closure time Deadline for Collateral adjustment the trades toward and auctioning reporting a according to the the TSO ( MRC timing ) collateral calls collateral call En.trading 016 - Tirana

Project accomplishment and Go-live (1) Customer acquisition process and Dry run Technical Fees and PX Rules Go Live Dry Run readiness collaterals Rules readiness 19 active members Life session Collaterals posting ETS ready Agreements NPS presence Contract signing Fees collection Settlement ready Training materials MCPs published Ongoing training First line support Internal testing Tariff structure 19 th of January January 2016 11 th of 2016 December November 2015 E 2015 October D 2015 C B A En.trading 016 - Tirana

Project accomplishment and Go-live (2) Members structure at Go-live vs. current and success factors Structure at 19.1.2016 Structure at 16.4.2016 Total number of Total number of members - 37 members - 19 8% 16% 16% 8% 30% Generators Generators Consumers Local traders Local traders International traders International traders 54% 68%  Flexible and competitive tariff structure with low entry barriers, based on two tariff options – with annual fee and lower volume based fee and NO annual fee with higher volume based fee;  Incentives for the Founding members (become members before Go-live);  Reliable partner and transparency due to the PCR assets utilization for the price calculation;  Credibility on the organization and competences of IBEX;  Developed crossborder and internal trade with high level of liberalization;  Customer oriented approach of the first line support. En.trading 016 - Tirana

Project accomplishment and Go-live (3) Statistics and price drivers The total traded volume for January – 77 371 MWh  The total traded volume for February – 139 122 MWh  The total traded volume for March - 196 316 MWh   Maximum of the traded volume on the Day Ahead Market (delivery day 07th of March 2016) – 9 144MWh with average power of 381MW.  Number of market participants – 37  Average MCP for January – 32,89 EUR/MWh  Average MPC for February – 22,08 EUR/MWh  Average MCP for March – 26,09 EUR/MWh En.trading 016 - Tirana