Les nouvelles modalits dintegration des marchs et des

Les nouvelles modalités d’integration des marchés et des bourses de l’électricité Colloque AFDEN Réseaux et territoires, du local à l’international Paris, 01 -12 -2016 Philippe Redaelli, secrétaire général EPEX SPOT © EPEX SPOT – All rights reserved – Strictly confidential 1

EPEX SPOT, a European story • • Electricity spot power exchange Created in 2008, roots going back to 2000 Over 275 Exchange Members 566 TWh of traded volume in 2015 Societas Europaea headquartered in Paris Over 150 employees coming from 17 countries Offices in Amsterdam, Bern, Brussels, Leipzig, London, Paris and Vienna © EPEX SPOT – All rights reserved – Strictly confidential © EPEX SPOT – All rights reserved 2

A shareholder structure in line with the industry needs © EPEX SPOT – All rights reserved – Strictly confidential © EPEX SPOT – All rights reserved 3

Ways of trading power on exchange CAPACITY MARKET > DAY-AHEAD MARKET > INTRADAY MARKET One year before delivery One day before delivery < 1 hour before delivery Value CAPACITY Value PRODUCTION Value FLEXIBILITY > FUTURES MARKET Year/Month/Week before delivery Fluctuations are HEDGED Integrated Clearing Solution © EPEX SPOT – All rights reserved – Strictly confidential © EPEX SPOT – All rights reserved 4

CACM and REMIT, regulatory driver and watchdog of the Internal Electricity Market © EPEX SPOT – All rights reserved – Strictly confidential © EPEX SPOT – All rights reserved 5

CACM regulation defines the role of markets in the networks operations © EPEX SPOT – All rights reserved – Strictly confidential 6

CACM partially defines what exchanges do and how they coordinate with TSOs ü Clearer governance and allocation of tasks between TSOs and PXs. Power exchanges are ü “NEMOs” : nominated electricity market operators, entities designated by the competent authority to perform tasks related to single day-ahead or single intra -day coupling ü “MCOs” : market coupling operators function means the task of matching orders from the day-ahead and intradaymarkets for different bidding zones and simultaneously allocating cross-zonal capacities ü CACM defines Target Models ü Competition facilitated for NEMOs © EPEX SPOT – All rights reserved – Strictly confidential © EPEX SPOT – All rights reserved 7

Two « Target Models » for market integration, now set in the EU Law Day-Ahead Market Coupling CACM Regulation Intraday Market Coupling (EU) 2015/1222 © EPEX SPOT – All rights reserved – Strictly confidential © EPEX SPOT – All rights reserved 8

Day-Ahead Market Coupling already almost achieved • Multi Regional Coupling (MRC) is a day -ahead price coupling now covering 85% of European electricity demand • So far a voluntary cooperation between PXs and TSOs • PXs operate the core market coupling processes through the “PCR” cooperation PCR EVOLUTIONS NWE, Baltic SWE Italy, Slovenia Feb 2014 May 2014 Feb 2015 Switzerland Technically feasible CZ, SK, HU, RO Separate PCR solution, end 2014 Austria-Slovenia July 2016 © EPEX SPOT – All rights reserved – Strictly confidential © EPEX SPOT – All rights reserved 9

XBID Target Model implementation is more decentralised • XBID is a mechanism of continuous cross-border intraday trading • So far a voluntary cooperation between PXs and TSOs • PXs contract the XBID system to Deutsche Börse AG • 1 13 4 7 2 3 XBID is expected to go-live end 2017, while Local Implementation Projects (“LIPs”) set-up XBID on each borders 10 6 8 5 11 N N 1 st go-live wave LIP 9 14 12 2 nd go-live wave LIP © EPEX SPOT – All rights reserved – Strictly confidential © EPEX SPOT – All rights reserved 10

A wider scope for integrated markets development and competition Liberalised NEMO market Legal NEMO monopoly EPEX SPOT acting as NEMO CACM not applicable • CACM facilitates market entry for NEMOs in a number of hubs • Competition and innovation as a result • Development of a European trading offer is at reach © EPEX SPOT – All rights reserved – Strictly confidential © EPEX SPOT – All rights reserved 11

CACM timeline for implementation CACM IMPLEMENTATION EXPECTED TIMELINE Target is end 2017. But there are delays…. 2017 2016 2015 2018 DA* ID** +10 m +2 m Feb. ’ 16 +2 m +4 m +6 m * NEMOs are ready to couple their markets in the DA market coupling target model ** NEMOs ready to couple their markets in the ID market coupling target model Designated NEMOs can start using passport rights in other markets with a 2 months prior notice to the local NRA © EPEX SPOT – All rights reserved – Strictly confidential 12

CACM does however not solve everything ? Financing of market coupling is uncertain ? Compatibility between national regulatory decisions ? Room for innovation aside the EU Target Models © EPEX SPOT – All rights reserved – Strictly confidential © EPEX SPOT – All rights reserved 13

REMIT is now in place to prevent market abuse Transparency obligation Prohibition of market manipulation and market abuse Reporting obligation Fully operational in 2016 © EPEX SPOT – All rights reserved – Strictly confidential © EPEX SPOT – All rights reserved 14

Market design going forward © EPEX SPOT – All rights reserved – Strictly confidential © EPEX SPOT – All rights reserved 15

Operation at a European scale now at reach The widest range of operation and services in Europe, covering today 50% of power consumption Current own markets Market expansion Market operation services and 25% shares Market operation services Market coupling services © EPEX SPOT – All rights reserved – Strictly confidential © EPEX SPOT – All rights reserved 16

Towards flowbased market coupling ü More integration between exchanges and TSOs ü Flow based is a methodology which takes into account the impacts of cross -border exchanges of electricity on network security constraints when optimizing the market flows ü More interconnection capacity available for the market ü Maximization of social welfare © EPEX SPOT – All rights reserved – Strictly confidential 17

Decentralized Capacity Market in France goes-live in December 2016 • Have peak capacities certified by RTE • Offer certificates to the market • Secure/buy guarantees to cover peak consumption of their customers • Penalty otherwise • Can choose between certification of demand response as capacity, • or reduction of consumption load © EPEX SPOT – All rights reserved – Strictly confidential © EPEX SPOT – All rights reserved 18

Decentralized Capacity Market in France goes-live in December 2016 Read more: http: //www. epexspot. com/document/36073/Capacity. Market_161025_EN_v 4_web. pdf © EPEX SPOT – All rights reserved – Strictly confidential © EPEX SPOT – All rights reserved 19

Development of renewables has boosted need for flexibility Solar and Wind Installed Capacity in Germany Source: Statkraft What is flexibility? System level Ressource level « Ability of the system to accomodate increasing levels of uncertainty while maintaining satisfactory levels of performance » « Ability of a ressource to start-up quickly and adjust load output to changing market conditions» © EPEX SPOT – All rights reserved – Strictly confidential 20

Markets are there to optimize. Automatization is developing. Big data Robot trading Block-chain ? 12 Independent Software Vendors (ISVs) are already certified to directly connect to EPEX SPOT markets R&D is there to improve the efficiency of optimization through markets © EPEX SPOT – All rights reserved – Strictly confidential © EPEX SPOT – All rights reserved 21

Decentralized/Local markets: yes but how? Local markets are seen as a solution to many problems currently occurring because of the growing share of renewable energies and distributed generation. SMART MARKETS ENERGIEWENDE - APPSTORE Connection to existing exchanges, seems intuitively the best option but network constraints need to be tackled. SMART GRID ? Fully decentralized Markets for Flexibility © EPEX SPOT – All rights reserved – Strictly confidential BIG DATA & ANALYTICS Fully centralized ? 22

VUCA! New era, new challenges Distributed resources Massive growth of RES 2. NATIONAL CHALLENGES • Generation capacity • Flexibility • DR access, aggregators… • Balancing 1. INTERNATIONAL CHALLENGES • Transmission planning and investment • Capacity calculation (includes Bidding Zones, XB Redispatch) • Security planning/generation adequacy and mutual reliance No more easy wins: IEM now needs to overcome national myopia – Can Winter New Market Design? Package help? “Market” = efficient price formation © EPEX SPOT – All rights reserved – Strictly confidential © EPEX SPOT – All rights reserved 23

Thank you for your attention! EPEX SPOT Paris 5 boulevard Montmartre 75002 Paris France Tel +33 1 7303 9600 info@epexspot. com EPEX SPOT Amsterdam Atlas Arena Amsterdam – Australia Building Hoogoorddreef 7 1101 BA Amsterdam The Netherlands Tel +31 20 305 4000 EPEX SPOT London 11 Westferry Circus Canary Wharf London E 14 4 HE United Kingdom EPEX SPOT Leipzig Augustusplatz 9 04109 Leipzig Germany EPEX SPOT Bern Marktgasse 20 3011 Bern Switzerland EPEX SPOT Wien Mayerhofgasse 1/19 1040 Wien Austria EPEX SPOT Brussels Boulevard de l’Impératrice 66 1000 Bruxelles Belgium p. redaelli@epexspot. com © EPEX SPOT – All rights reserved – Strictly confidential 24