Cross Border TSO Balancing Procurement

- a Generator/Trader Perspective

Malcolm TaylorHead of Electricity Trading

Association of Electricity Producers

☏ +44 (0)207 930 9390mtaylor@aepuk.com

www.aepuk.com

Background & Aims•Developing Regional Markets

•Efficiencies of cross-border trading•Parallel development to energy trading

•Model 1: Provider1↔TSO2

•Model 2: Provider1↔TSO1 ↔ TSO2

•First Steps with Model 2•Introduces further beneficial competition in balancing services provision•Does not distort commercial energy trading over Interconnector•Improves transparency & facilitates non-discriminatory access•Protects Security of both Systems•Does not reserve interconnector capacity preferentially for TSOs•Compatible with both markets & developments•Does not prevent subsequent development of model 1

The Challenge of Market Compatibility •Intra-Market and Inter-Connector differences

•Gate closures per day•Neutralisation Period•Settlement period duration•Detailed price formulation•Other connected markets

The Proposals for Balancing Service •Up to 5 @ 100 MW tranches•Settlement Period begins at Gate Closure + 1h•Service Duration 1h

•Consistent with expected evolution of Inter-Connector timings•Simultaneous web-site posting of prices

•Gate closure + 15 mins•Subsequent web-site posting of bids/offers used

•End of delivery period + 15 mins•Prices formulated consistent with intra-market methodologies•Principles of price formation (including constraints effects) published

•Emergency assistance/ Rescue arrangements remain•Use of inter-Connector charging to be determined

Generator/Trader Response •Useful codification and formalisation of process•Improved transparency will help market functioning

•Inter-Connector usage charges impact competition amongst providers•Interaction in UK of 1h balancing services and ½ h Settlement Periods

•Review progress after 6-12m