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Integration of the Czech and Slovak day-ahead markets

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1.1. Introduction
Integration of the Czech and Slovak day-ahead markets had been prepared in accordance with a Cooperation Agreement between the Czech and Slovak TSOs relating to the “Czech and Slovak Electricity Markets Coupling” (MC) project launched in accordance with the record of the meeting of the Czech Minister of Industry and Trade and the Slovak Minister of the Economy of 22 May 2008 (referred to herein as “the Agreement”) and the Assignation by the Slovak Minister of the Economy of 5 November 2008 (referred to herein as “the Assignation”). CEPS and SEPS had been charged with the task of organising the Czech and Slovak day-ahead markets coupling by means of “implicit auction” for the Czech Republic/ Slovakia interconnector.
 
Until 31th August 2009, available transfer capacity on the CZ/SK interconnector is being allocated through coordinated auctions for five TSOs via the e-Trace trading portal using the NTC-based method (for all the timeframes – yearly, monthly and daily auctions).
 
Following the integration of the Czech and Slovak day-ahead markets planned for 1 September 2009, day-ahead allocation of available capacity on the CZ/SK interconnector will no longer be subject to coordinated auction. Month-ahead allocation in 2009 will continue to be organised via the e-Trace trading portal.

1.2. Technical background
Once a second circuit of the Slavětice-Dürnrohr power line (V438) was put into operation (in November 2008), the major bottleneck within the interconnected power systems, which constrained not only exports from the Czech Republic in the main direction to Austria but also trading over interconnectors with neighbouring TSOs (SEPS and E.ON), was removed.
 
Other constraints on the CZ/SK interconnector, within the Slovak transmission system, relate to exports from the Czech Republic. The level of such constraints depends on network configuration and generation dispatch. Imports into the Czech Republic remain to be limited by bottlenecks within the Czech network. The interconnector itself is strong enough in transfer capacity (3x400kV and 2x220kV lines).
 
The CZ/SK interconnector is currently used for trading in both directions (exports/imports). The maximum transfer capacity is not fully utilised due to netting. The actual utilisation is considerably lower than the total tradable capacity. During the first half of year 2009, the CZ/SK interconnector carried, together with loop flows, physical flows of max. 1400MW in the export direction from the Czech Republic and max. 500MW in the import direction into the Czech Republic. These figures were well below the physical capacity of the interconnector. Sufficient transfer capacity for the MC mechanism can be expected during the entire year, with an exception of unpredictable emergency outages in the network.
 

1.3. Capacity allocation procedure
Capacity allocation method agreed jointly by CEPS and SEPS is given below. Identical scheduling and matching concept will be applied within the CEE region except for gate closure. As stipulated in the Assignation, implicit capacity allocation by means of the Market Coupling mechanism is assumed for day-ahead capacity allocation on the CZ/SK interconnector.
 
Long-term capacity allocation would not be employed for the CZ/SK interconnector. Confirmed (fixed) nomination (notification) of transfer schedules would be accepted without limitation well in advance, on D-2 day. Such a solution provides enough time to take appropriate measures (countertrading, cross-border redispatching, reduction in nominated transfers).
 
This procedure is transparent and provides a consistent solution for both long-term and day-ahead capacity allocation on the interconnector; it reflects the interconnector technological development and is close to the mechanism currently employed for the Germany/Austria interconnector.

1.4. Description of the procedure

Proposed gate closure timescale:
Seven-day scheme will be chosen for gate closure (all times in CET hrs):

  • Gate closure for long-term transfer nominations – D-2: 7:30;
  • Between 9:00 and 12:00: checking of technical limits and proportional reduction in nominated transfers (where appropriate);
  • 13:00: confirmation of long-term transfer nominations

Available capacity calculation:
The resulting capacity value available for the MC mechanism will be based on the following four components:

  • nomination of long-term transfers over the CZ/SK interconnector;
  • nomination of long-term transfers allocated by the CAO;
  • transfers in the MC mechanism;
  • nomination of day-ahead transfers allocated by the CAO.

Transfers under items 2 and 4 will be estimated from the previous day levels.
 
The above mentioned proposals will be further consulted with ERÚ (Czech Energy Regulatory Office), market participants and CAO (Central Allocation Office of CEE TSO).

1.5. Main benefits for market participants
  • A transparent a consistent solution for both long-term and day-ahead capacity allocation on the interconnector. It reflects the interconnector technological development and is close to the mechanism currently employed for the Germany/Austria interconnector.
  • Removal of administrative barriers for market participants.
  • This procedure is in full compliance with EC Regulations, compatible with the FBA method estimated to be employed for other interconnectors..

Possible shortcomings that might arise from the fact, that values of nominated transfers are unknown to TSOs until D-2, could be overcome by taking appropriate measures, if necessary.

1.6. MC implementation
  • CEPS and SEPS, the respective Transmission System Operators, are ready to launch the MC mechanism on 1 September 2009.
  • Auctions for long-term transfer capacity on the CZ/SK interconnector will be organised until the end of 2009.
  • From 1 January 2010 auctions for long-term transfer capacity will no longer be organised for CZ / SK interconnector and the TSOs will employ the above described MC procedure.

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