CEE electricity market coupling timing links Romania but not Poland

Romania will synchronise its gate closure time with the existing central and eastern European market coupling project, but Poland is choosing to retain its existing gate closure an hour later, in line with its western European neighbours.

The gate closure time for Day-ahead trading on power exchanges in Hungary, the Czech Republic and Slovakia and now Romania will be set at 11:00 local time, but Poland’s deadline will remain at 12:00, according to a statement on Monday from the project steering committee for the 5M market coupling project. The committee includes the national energy regulators, grid operators and power exchanges.

Poland and Romania formally declared their plans to join the existing Czech-Slovak-Hungarian market coupling project in July. The Czech Republic, Slovakia and Hungary have operated coupled Day-ahead electricity markets since September 2012. The enlarged project, after Poland and Romania join in 2014, will be known as 5M market coupling. The coupling will be known as 5M.

Polish exchange POLPX was the main initiator for changing the deadline to settle Day-ahead prices to 12:00 local time, when the Day-ahead price is fixed between Poland and Sweden (see EDEM 10 July 2013).

CEE electricity traders were given a week to decide on their preferences for gate closure times in a survey from the exchanges (see EDEM 17 July 2013). Following this survey, the regulators elected to keep the market coupling gate closure at 11:00 local time, involving the Czech, Slovak, Hungarian and Romanian Day-ahead electricity markets, while the Polish market area would be integrated later.

Romanian exchange to shift

The move means that Romanian exchange OPCOM will adjust from its previous gate closure of 12:00 local time.

One Romanian trader welcomed the time change on Romanian exchange OPCOM, but warned that market participants and producers would have to be more efficient for market coupling to work.

“Romania will have to adjust to the new gate closure time. They will have to adjust their export tariff as well. In order for the project to function optimally, they need to post the results at the same time, as the gate closing time is not as important as posting the results is,” he said.

“But the mutual settlement time for exchange trading will benefit the Romanian spot market – it will be less volatile, closer to Hungarian spot prices, plus the liquidity will increase.”

Polish integration later

The national energy regulators confirmed that the market coupling would work towards extending a mutual gate closure time to Poland as well.

POLPX declined to comment individually, confirming that the decision was mutual and agreed between all parties.

“Close cooperation among [the] 5M market coupling project partners will be ensured to contribute to future market integration,” the regulators said in a statement, adding that the coupling of the Polish market area will be implemented later in the context of the CEE FBMC (central east Europe flow-based market coupling) initiative. In the meantime, the five power exchanges will continue to cooperate on implementing the regional price coupling solution, under the target model for European integration.

The source agreed with the regulator’s decision to postpone Poland joining the market coupling project. “It’s a good idea for Poland to wait because if we would have the same time [for the gate closing time], the opportunities would change and I think it would be hard to make some deals between Poland and the Czech Republic.”

Trading optimisation

Most central and eastern European power traders have told ICIS that forwarding the gate closure time by one hour would cut opportunities to optimise their position with the central west Europe (CWE) project fixing, including Germany, France, the Netherlands and Belgium (see EDEM 16 July 2013).

At least one trader active on the Polish market continued to oppose setting the gate closure at 12:00. “We were against it because this is the time when EPEX Spot closes their gate, so there was no possibility to make deals to flow electricity to Germany and the Czech Republic.” Karolina Zagrodna and Sophie Udubasceanu