The Nord Pool Power Market Model w w w . n o r d p o o l g r o u p The Nord Pool Power Market Model Modelo Nord Pool: Parte 1: Desarrollo y regulacion del sector electrico. Un analisis basado en fuentes renovables w w w . n o r d p o o l g r o u p Energy transition Nordic energy mix 2013 www.nordpoolgroup.com/consulting We are ambassadors for modern power markets across the world Nord Pool Consulting works with Governments, BILDE Power Exchanges, Regulators, TSOs, DSO, Universities and other stakeholders on: Market design Rulebook development Market regulation Power market systems Capacity building Competence building www.nordpoolgroup.com/consulting From feasibility studies to international power markets European target model Southern African Power Pool NORDPOOL COLORS Use Eyedropper from Font Color or Day-Ahead prices are Shape Fill dropdown 100% 40% 90% 80% 70% 60% DARK determined simultaneously BLUE LIGHT BLUE across Europe GREEN FINLAND BLACK SWEDEN The Price Coupling of Regions (PRC) initiative now RUSSIA enables the coupling of Day Ahead electricity markets NORWAY SECONDARY ACCENT COLORS in 23 countries representing over 90% of European ESTONIA power consumption. OFF-WHITE LATVIA WHITE DENMARK LITHUANIA BELARUS IRELAND UK NETHER- POLAND LANDS GERMANY UKRAINE BELGIUM LUXEMBOURG CZECH REPUBLIC SLOVAKIA MOLDOVA Part of PCR initiative today AUSTRIA FRANCE HUNGARY 4 MMC SWITZERLAND ROMANIA SLOVENIA Independent CROATIA BOSNIA & SERBIA HERZEGOVINA BULGARIA ANDORRA MONTE- KOSOVO ITALY NEGRO MACEDONIA ALBANIA TURKEY PORTUGAL SPAIN GREECE nordpoolgroup.com/academy 92 South-east Europe India ASEAN www.nordpoolgroup.com/consulting The future is electric! www.nordpoolgroup.com/consulting A world view based on facts gives reason for optimism The world today 2018: BRICS and few other nations https://www.gapminder.org/ www.nordpoolgroup.com/consulting Oslo: European green capital 2019 Carbon targets for 2020 50 % and 2030 95 % www.nordpoolgroup.com/consulting www.nordpoolgroup.com/consulting 1.000.000 electric cars in Europe Why is electricity production important? Source: IPCC and EPA (2014): https://www.epa.gov/ghgemissions/global-greenhouse-gas-emissions-data www.nordpoolgroup.com/consulting When we run out of oil and gas, then what? www.nordpoolgroup.com/consulting n o r d p o o l g www.nordpoolgroup.com/consulting www.nordpoolgroup.com/consulting www.nordpoolgroup.com/consulting www.nordpoolgroup.com/consulting www.nordpoolgroup.com/consulting www.nordpoolgroup.com/consulting Energiewende across Europe www.nordpoolgroup.com/consulting European target model: One common energy market The European target model shall ensure the completion of the EU Internal Energy Market for electricity. Guidance and standards for each timeframe: Day Ahead (DA), Intra-Day (ID), Balancing and Forward Market. A fair and transparent Day-ahead power price is a key factor for the target model’s success. FINLAND SWEDEN RUSSIA PCR (Price Coupling of Regions) • The initiative of 7 Power Exchanges to develop a single price NORWAY coupling solution, launched Feb 2014 ESTONIA • EUPHEMIA algorithm LATVIA DENMARK LITHUANIA MRC (Multi-Regional Coupling) NORTHERN IRELAND • Coupling of regions and efficient management of available BELARUS IRELAND transmission capacities between areas and countries UK POLAND • Implicit capacity allocation NETHER- LAND GERMANY UKRAINE BELGIUM XBID (Cross Border Intra-Day) LUXEMBOURG CZECH REPUBLIC • Development of a common Intraday trading platform with shared SLOVAKIA MOLDOVA order book and capacity management module FRANCE AUSTRIA HUNGARY SWITZERLAND ROMANIA SLOVENIA The integrated European electricity market is expected to increase CROATIA BOSNIEN & SERBIA liquidity, efficiency, social welfare and transparency of prices and flows. HERZEGOVINA BULGARIA MONTE- ITALY NEGRO KOSOVO MAKEDONIA SPAIN ALBANIA TURKEY PORTUGAL GREECE 22 The Nord Pool model 10 years Day-ahead Intraday Intrahour 1,5 months Time Financial market Financial market Hedging of future prices EPADs Power Purchase Agreements (PPA) Elspot Finance of new projects EU ETS Reference price (system price) delivery Physical GO Day-ahead market (AKA DAM; Elspot) Elbas The DAM is a daily auction that closes at 12:00 every day. System price and area prices are calculated for delivery each hour the following including ATC Balancing market Intraday market (AKA IDM; Elbas) The ID is a continuous (24/7) market and closes shortly before each delivery hour. Remaining transmission capacity after the TSO publication DAM prices is allocated to ID. settlement NODES flexibility market Financial settlement Physical Financial DSO level demand response market Physical delivery delivery settlement Organized market Nord Pool Balancing markets (AKA Reserve market) Bilateral trading (OTC) TSOs Intra-hour market for maintaining 50 Hz Statnett: 100 % carbon neutral Norway www.nordpoolgroup.com/consulting Energy transition Nordic energy mix 2013 www.nordpoolgroup.com/consulting Wind and solar generation % 2017 www.nordpoolgroup.com/consulting Nord Pool development 27 Development since the early 1990s www.nordpoolgroup.com/consulting Development of cross boarder trading arrangements Integrated markets ”The Nord Pool-model” Zonal pricing/market coupling Daily transmission capacity auctions Long-term transmission capacity auctions Bilateral deals Isolated markets 29 We continue to see steady growth Gross Bidding Agreements: 600 All buy and sell volume from the biggest producers and consumers 524 TWh 500 400 300 200 100 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 www.nordpoolgroup.com/consulting Market regulation and Nord Pool Market Surveillance The Physical and Financial Power Market Oslo Plaza, 16th January 2019 Nord Pool’s stakeholders “Reregulation, not deregulation” Regulated in Norway by Norwegian Water Resources and Energy Directorate (NVE) NVE is a directorate under Norwegian Ministry of Petroleum and Energy 100 % owned by Nordic and Baltic transmission system operators Nominated NEMO in Austria, Belgium Statnett SF (Norway) 28.2% Elering AS (Estonia) 2% Denmark, Estonia, Finland, France, Germany, Great Britain, Ireland, Svenska kraftnät (Sweden) 28.2% Litgrid AB (Lithuania) 2% Poland, Latvia, Lithuania, Luxembourg, the Netherlands and Energinet.dk (Denmark) Augstsprieguma tīkls AS Sweden 18.8% (Latvia) 2% A free but regulated market fair for Fingrid Oyj (Finland) 18.8% everyone, not Laissez-faire www.nordpoolgroup.com/consulting Nasdaq’ stakeholders 33 Which regulations are relevant in the electricity wholesale market? Electricity wholesale market regulation Wholesale market participant (Nord Pool member) Pool (Nord participant market Wholesale Nord Pool’s Trading Rules REMIT Transparency Regulation CACM 35 REMIT – The first set of common rules for wholesale energy markets in Europe REMIT – REgulation on wholesale Market Integrity and Transparency Aims to ensure on European level: • Confidence in the market integrity • Prices that represent a fair and competitive interplay between supply and demand • No profits are drawn from market abuse 36 REMIT ensuring parties ACER – Agency for the Cooperation of Energy Regulators • Collects and analyses wholesale market data • Detects and prevents possible market abuse National Regulatory Authorities • Responsible for carrying out investigations and giving sanctions Nord Pool as an Organised Market Place • Have arrangements in place to identify breaches: market manipulation and insider trading • Reports possible breaches to the national regulatory authority REMIT Best Practice report • The report is based on input and knowledge sharing of nine market participants, one sector organisation and staff from Nord Pool • There is no “one size fits all” when it comes to compliance. The report represents a list of “ideas” or “recommendations” for all types of market participants – Compliance Regime – Inside Information – Market Manipulation 38 Market Manipulation 39 Alleged manipulation by Iberdrola “Following an investigation, the competition watchdog fined Iberdrola €25 million in November 2015 for manipulating the Spanish wholesale electricity market.” 40 Capacity hoarding Important to note • No intention is required • There is no requirement for it to actually be an impact on supply, Drawing by Drawing by Dominik demand or price Joswig Inside information and insider trading 43 Inside information Inside Information - Information that would be likely to significantly affect prices if made public – Cannot be used for trading – Must be kept confidential – Cannot be used as basis for giving advice on trading Inside information regarding your own business must be published in an effective and timely manner – Disclosure may be exceptionally delayed in some cases 44 Was the information disclosed timely and effectively? Elering managed to prove that it was! 45 Compliance REMIT Urgent Market Messages Notify the market about planned or unexpected changes to generation, consumption and transmission Comply with European energy market regulations on information disclosure with automatic forwarding of data direct to the ACER REMIT platform and optional reporting to ENTSO-E Transparency Platform Connected API integrates your systems with UMM, enabling seamless information transfers between you and the market View real time notifications of events, disturbances and price impacts on short and long term markets Available in European markets and accessible alongside all Nord Pool applications