Imbalance settlement period

 

Coal-biomass co-firing plants under serious risk of returning aid due to imprecise clues.

 

 

It is probable that legislative efforts to elaborate on the two fundamental Internal Electricity Market network codes:

1) Network Code for Requirements for Grid Connection Applicable to all Generators (NC RfG), and

2) Network Code on Demand Connection (DCC)

will effect in the coming months in the adoption of regulations with European-wide binding force.

It merits noticing that both network codes impose sometimes strict technical and legal requirements on, respectively, Power Generating Modules and Demand Facilities.

 

 

Acknowledging a patchwork of existing European renewable promotion schemes may provide to the contrary, the requirements proposed in the latest version of the draft GBER Regulation propose that if a renewable electricity is supplied to the grid, the producers or where relevant aggregators should be subject to standard obligations regarding network connection and network connection charges and should bear responsibility, in financial terms, for all deviations (imbalances) between their scheduled and actual generation within a given imbalance settlement period. The said responsibility can be outsourced to other balance responsible parties, subject to commercial arrangements.

 

The key issue is also that the State aid to electricity generation from non-renewable sources and to energy infrastructures will not be exempt from the EC notification 'in view of their high distortive potential impact on the internal energy market.' Such investments will have to be notified to the European Commission to assess their compatibility with the internal market.

Bidding zones instead of borders

 

Financial energy transmission rights could fall under the category of financial instruments but  transmission system operators assert they can benefit from the “incidental” activity exemption. Are they right?

 

 

2014 has been politically set as a target for the completion of the European internal market for electricity and gas. It is useful to know the schedule for adopting the main network codes in that regard.

 

voll

 

Assuming Framework Guidelines become binding law, and the fact intermittent generation as the PV or wind sources have very low variable costs, it is probable in the future Single Electricity Market baseload fossil-fueled generation like coal and gas will gradually be squeezed out from providing balancing services.

Investment outlays engaged in these sources will probably be recovered over longer periods due to contained periods of operation of these units on the electricity balancing market. In such a situation it appears more and more questionable, whether the investors decide to engage in new sources of fossil-fuel generation.

ENTSO-E however engages in a dispute with the European energy regulator ACER over the content of the Framework Guidelines.

 

 

As market participants will not be allowed to trade until they are registered, it may potentially represent a barrier to trade in the internal energy market.

Registration will not be a one-off event, but rather an ongoing requirement due to obligation to keep information provided up-to-date. From the practical point of view it is therefore necessary to establish within corporate structures of market participants arrangements ensuring that new requirements will be properly and timely discharged.

It should be noted that market participants are under obligation to register even if they are located outside the European Union.

 

Another issue of potential significance for the wider market is the commercial exploitation for data contained in the part of the register publicly revealed by ACER.

 

 

 

graph1

 

 

Somebody my ask why exactly 100 MW (and above) outage is treated as inside information under REMIT Regulation and what is the legal basis for such determination...

 

ccr core

 

1. Are there in any Member State any energy exchanges which do not qualify as regulated markets or MTF as defined by MiFID (for instance act under specific national legislation divergent from financial markets regulations)?

2. Do the energy exchanges referred to under point 1 trade in physically settled commodity (electricity) forwards?

3. Are transactions mentioned in points 1 and 2 captured by MiFID?

 

 

It seems that there is no agreement between European Supervisory Authorities and non-financial market participants as regards draft Technical Standards on risk mitigation techniques for OTC derivatives not cleared by a CCP under the Regulation on OTC derivatives, CCPs and Trade Repositories (the draft RTS).

 

 

There are grounds for applying certain regulatory guidance elaborated under financial instruments’ market abuse regime to wholesale energy products regulated by the REMIT Regulation. The best practice for the treatment of rumours seems to be good example.

 

These points might also be of relevance for emitters of greenhouse gases, considering interdependencies between electricity and carbon price curves and the future potential covering of emissions allowances by the financial instruments legislation.

 

 

An existing generating unit which is not compliant with a provision of the Network Code should apply for derogation within 12 months from the day the requirement, of which it is not compliant with, becomes applicable.

 

The network operator will have the right to refuse the operation of the generating unit, if the 12 months period terminates without an application for derogation.

 


What precisely should be published under new disclosure scheme for wholesale energy products?

ACER Agency in its Guidelines built its list consisting of three main items:
- any planned outage, limitation, expansion or dismantling of capacity of one generation unit that equals or exceeds 100 MW, including changes of such plans,
- any unplanned outage or failure of capacity that equals or exceeds 100 MW for one generation unit, consumption or transmission facility, including updates on such outages or failures,
- any other information that is likely to have a significant effect on the prices of one or more wholesale electricity product if made public;

the last one however is quite spacious.

But ERGEG’s catalogue released in December 2010 as regards electricity generators stipulated the positions for disclosure far more extensively and specifically.