Authorities are picking up the pace on moves needed to also enable traders to begin participating in Greece’s intraday electricity market, one of the new wholesale markets emerging with the target model’s recent introduction.
The Greek energy exchange will forward its proposal for necessary market regulation amendments to RAE, the Regulatory Authority for Energy, within the next two months, energypress sources informed.
These revisions will take finalized shape through ongoing discussions between the energy exchange, as operator of the intraday market, power grid operator IPTO, managing international grid interconnections, and RAE.
The authorities are seeking to establish an optimal formula for the intraday market entry of electricity traders.
The talks, until now, have indicated that intraday day interconnection rights will not be required for transboundary trade between intraday markets that have not undergone coupling.
Therefore, traders will be able to participate in the intraday market by utilizing the amount of daily interconnection rights they have secured and not used for transboundary transactions in the day-ahead market.
The addition of traders to the intraday market promises to boost its liquidity, currently low. This will help liberate market players by offering them greater flexibility, limiting the pressure on the balancing market.
The Greek-Italian electricity market coupling of day-ahead markets, launched on December 15 as part of the target model, is living up to its expectations as a safety valve facilitating optimal electricity flow between countries.
The initiative, operating through a single price coupling algorithm, EUPHEMIA (Pan-European Hybrid Electricity Market Integration Algorithm), which calculates energy allocation, net positions and transboundary electricity prices, has run smoothly since its launch over a month ago.
Greek-Italian transboundary electricity transactions admittedly enjoyed a high level of maturity prior to the introduction of market coupling, courtesy of reliable price forecasts by participants for the Greek and Italian markets.
A grid interconnection, in the form of a 163-km, 400-kV voltage and 500-MW capacity subsea cable, has been in service since 2002.
However, the market-coupling initiative has taken the efficiency of these transboundary Greek-Italian electricity transactions to a higher level as auctions allocating grid interconnection capacities are no longer required.
Since the mid-December coupling of the Greek and Italian energy markets, electricity has constantly flowed from the market offering lower prices to the higher-priced market, proving this market system’s ability to utilize interconnections to their fullest.
Market coupling of the Greek and Bulgarian day-ahead markets is planned to follow, its launch scheduled for spring.
An increased number of interconnected electricity markets promises to give the Greek wholesale electricity market a regional role. However, transboundary grid interconnections will need to be upgraded if this is to be achieved.
Power grid operator IPTO is taking initiatives to upgrade Greece’s interconnections with neighboring countries, acknowledging transboundary grid link insufficiencies are having a negative impact whose consequences include market functional disorders and higher electricity prices.
The operator has formed working groups with all of Greece’s neighboring countries to examine the prospect of constructing or reinforcing existing interconnections.
These associations include cooperation with Italian operator Terna. The two sides, prepared to consider both an upgrade of the existing system or the development of a new one, estimate that the Greek-Italian grid interconnection requires a capacity increase of between 500 and 1,000 MW.
According to sources, IPTO and Terna have agreed to proceed with related studies for an optimal solution as soon as possible. The operators intend to reach a decision within the next few months. Any selection will need to be approved by the Greek and Italian regulatory authorities of energy.
IPTO intends to include this project in its ten-year development plan covering 2022 to 2031, expected to be presented at the end of the year.
The existing Greek-Italian electricity grid interconnection, a 163km subsea cable with a 500-MW capacity in operation since 2002, will be used to facilitate the target model’s next stage, market coupling, beginning on December 15 with the aim of harmonizing the energy markets of the two countries.
ENTSO-E, the European Network of Transmission System Operators for Electricity, has pointed out that a Greek-Italian grid interconnection boost will be needed for an effective bridging of prices between the two countries.
Domestic market players and officials are eagerly awaiting to see how the target model’s next stage, Greek and Italian day-ahead market coupling, scheduled for December 15, will influence wholesale electricity prices.
Wholesale electricity prices in the day-ahead market and, especially, the balancing market, have escalated since the target model launch in Greece a month and a half ago.
Greece’s market coupling with Italy will be a crucial step as it promises to take Greece to the essence of the target model effort, namely gradual unification of national energy markets – electricity and gas – into one common European market.
Once market coupling is established between Greece and Italy, energy will flow from the country with lower energy prices to the higher-cost country – to the extent permitted by grid interconnection capacities – until price discrepancies have evened out.
All preliminary work for next week’s Greek-Italian market coupling launch has been successfully completed. An ongoing dry-run procedure involving simulated trading will continue until December 12.
The market coupling launch, three days later, is on schedule, the Greek energy exchange has informed RAE, the Regulatory Authority for Energy.
Market coupling of Greece and Italy’s balancing markets will take place at a latter date, while Greek-Bulgarian market coupling is planned for early in 2021.
The target model’s launch over the weekend was successfully staged with a full field of 45 participating players, but wholesale electricity prices were pushed slightly higher.
Saturday’s day-ahead price for yesterday’s opening day ended at 53 euros per MWh before rising considerably to 61 euros per MWh yesterday for today.
This increase may be the result of a lack of confidence felt by players as they adjust to new market ways. In addition, the entry into the grid of high-cost lignite-fired power stations to cover telethermal systems is another factor.
Though producers, suppliers, traders and renewable energy players all actively traded for the target model’s launch, they have yet to fully come to terms with the new market conditions.
It is a matter of time before the model’s new markets – day-ahead, intraday, balancing – find their rhythm and price levels are normalized, energy sector authorities have noted.
No major issues concerning procedural or technical matters have been reported.
The intraday market launch was smooth. Prices ended at levels set by the day-ahead market as corrections were not made.
As for the balancing market, a brand new tool for the entire system, price levels ended as anticipated, at levels set during dry-run testing in the lead-up to the target model’s launch.
The target model, representing the Greek electricity market’s most significant reform, will enable market coupling with equivalent European markets, a development ultimately expected to reinforce energy security; offer consumers greater financial benefits through transboundary competition; prompt competitive pricing in the wholesale market; facilitate further RES penetration; and, by extension, hasten greenhouse gas emission reductions and the decarbonization effort.
Power grid operator IPTO has declared being fully prepared for its imminent target model role of managing the balancing market, one of the new market systems to come into effect this coming Monday, when the target model is set to be launched.
Besides being tasked with managing the target model’s balancing market, IPTO, in a widely unknown role, will also be responsible for measuring overall operations of the target model.
The balancing market, an extremely complex market system requiring fundamental changes compared to current practices, will perform real-time balancing of demand against available offers.
The energy exchange will be responsible for the target model’s day-ahead and intraday markets.
In the lead-up to the forthcoming launch, IPTO, challenged by pandemic-related obstacles such as travel and staff restrictions, needed to make a series of coordinated efforts. These have included development of information systems and corresponding interface systems with the energy exchange (BMMS, MSS, XBMS and MODESTO), plus staff training.
The target model, representing the Greek electricity market’s most significant reform, is essential for market coupling with equivalent European markets.
The target model promises to reinforce the country’s energy security, offer consumers greater financial benefits through transboundary competition, lead to fair and competitive pricing in the wholesale market, while also facilitating further RES penetration, and, by extension, hastening greenhouse gas emission reductions and the decarbonization effort.