Cookies on the ICIS website

close

Our website uses cookies, which are small text files that are widely used in order to make websites work more effectively. To continue using our website and consent to the use of cookies, click away from this box or click 'Close'

Find out about our cookies and how to change them

Flow-based market coupling data not available some days

30 Apr 2013 11:15:03 | edem

ICIS_00148538.jpg

Flow-based market coupling, which could help to safeguard supply in central west Europe (CWE), cannot deal with higher renewable generation, a electricity market trader has said.

Data on hourly prices produced by a simulation of flow-based market coupling for the four coupled markets is being published by European cross-border auctions operator CASC every Thursday since the start of January. However, this data misses out occasional days.

Days when data on the trial run for the flow-based coupling is not provided often coincide with high German renewable generation, the trading source said.

Flow-based market coupling should maximise the use of cross-border capacity so that safety margins can be lower. This could counteract the unpredictability of supply caused by a growing renewable generation.

Yet the CWE flow-based coupling trial has not been able to show that the system can cope with high renewable generation, the trader said.

"What is the point of going ahead with flow-based market coupling if the model can't produce data every other day? They are making it clear to the market that they can't deal with higher renewable generation," said the trader.

According to the flow-based market coupling project partners, conclusions cannot be drawn regarding correlation between high wind generation and failures in the flow-based process. "It is true that exceptional circumstances like high wind infeed into the German grid put the flow-based process under constrains," they said, but this occurs because of procedures and tools that still need to be finalised and also because existing available transmission capacity (ATC) operations have to be run in parallel.

From Friday, project parties will be publishing explanations for missing days on the CASC website, they said. Reasons for missing days include technical problems with prototype equipment used by TSOs and operators' errors, they explained.

Project partners have been able to demonstrate their ability to run successful flow-based computations under high German wind conditions on 29 January, 5 February and 23 March, they said.

Price convergence

Simulation data shows flow-based coupling creating greater convergence of prices than under the existing coupling model in the CWE region, narrowing the price spread between markets as more export capacity is made available.

The data provides hourly prices for the CWE markets of Belgium, the Netherlands, France and Germany for most days from 1 January alongside the hourly prices produced by the existing available transmission capacity model.

Data for 10-16 April shows the France-Germany price spread under flow-based market coupling narrowing to €3.22/MWh, from €5.21/MWh under the available transmission capacity model.

Flow-based coupling brought French hourly prices down and increased German prices, data shows.

Front-year changes under FBMC

According to the trader, this means that the German Cal '14 Baseload, which will be in delivery when the flow-based model goes live, should be €2.00/MWh higher because of flow-based market coupling, while the equivalent French contract should be €2.00/MWh lower.

"The very sensitive days weren't published. If we saw all days, maybe the German Cal '14 Baseload would have to be €3-3.35/MWh higher," he said, indicating that higher renewable generation in Germany under the FBMC system would increase German exports and push up prices in the country.

The German front-year baseload settled at a €3.60/MW discount to its French counterpart on Wednesday, according to ICIS assessments.

Missing days

Renewable generation in Germany was high during some, though not all, of the days when data was missing.

For example, data was missing for 30 and 31 January, when exchange data shows average combined wind and solar power generation at 24-26GW. Data was also missing for 24 and 25 March, when there was 19GW average renewable generation in Germany.

Data was available for 18 April, when German renewable energy generation reached record highs around 32GW during peak hours, however.

Summer spread reversal

A narrowing of the price spread between the two markets is consistent with the usual arbitrage between France and Germany, which places French prices above their German counterparts.

But this is often reversed for shorter-dated contracts during the summer as French nuclear generation is better suited to catering to steady demand often seen during the summer, while Germany's large renewable fleet copes better with peaks of demand during the winter.

Although currently French far-curve prices are still above their German equivalents, French spot prices and some French near curve contracts settled at a discount to equivalent German prices on 24 April. This was caused by robust French nuclear and hydro supply, said traders, and is consistent with the usual summer trend. Under these conditions, flow-based market couple would narrow the location spread by increasing French prices and lowering German prices.

Second phase of CWE

Flow-based market coupling is the second phase of the central west Europe (CWE) project, and will improve market coupling by fine-tuning the calculation of cross-border capacity. The region is already coupled according to the available transmission capacity model under which grid operators specify capacity available on each border.

The new flow-based system, which is currently being tested in a parallel run, is expected to go live after the north west Europe (NWE) market coupling project is put in place, said a spokesman from EPEX Spot power exchange. The target for NWE is this November, he said. Beatrice Mavroleon

Other Related Stories

Other Options