emcc: News

Price coupling on SwePol Link, the interconnector between Sweden and Poland, was launched by Nord Pool Spot on 15th December with delivery date 16th December. In order to make the link available for CWE-Nordic market coupling, EMCC had to implement it into its existing Interim Tight Volume Coupling (ITVC) scheme. With the new Polish bidding area integrated, EMCC now calculates 20 bidding areas with 28 interconnectors.

The SwePol Link initiative was started by the involved transmission system operators PSE Operator and Svenska Kraftnät, the power exchanges Polish Power Exchange and Nord Pool Spot as well as the connection owner SwePol Link AB and SwePol Link (Poland).

We hereby report to you on the status of the extension of the CWE-Nordic Interim Tight Volume Coupling (ITVC) to include NorNed (“step 2”).

As mentioned previously, the testing phases of step 2 including the NorNed cable have been delayed due to the impact of the step 1 launch. Due to technical issues it will not now be possible to complete testing in time for a launch of step 2 before Christmas. The involved TSOs and PXs together with EMCC are now working to a planned launch date of 11th January. This is subject to the satisfactory completion of testing, and we will come back to you with confirmation of this date no later than 6th January.

We hereby report to you on the status of the extension of the CWE-Nordic Interim Tight Volume Coupling (ITVC) to include NorNed (“step 2”), following the successful start of CWE-ITVC step 1 on 9th November.

As mentioned previously, the testing phases of step 2 including the NorNed cable have been delayed due to the impact of the step 1 launch. Nonetheless, the involved TSOs, PXs and EMCC are still working to a target launch date of 14th December. 

This is subject to the satisfactory completion of testing, and we will come back to you with further information on 8th December 2010.

Parallel to the start of CWE-Nordic Interim Tight Volume Coupling on 9 November, European Market Coupling Company (EMCC) celebrated its first year in operation, looking back at an exciting and successful year.

A year ago, on 9 November 2009, EMCC started tight volume coupling between Denmark and Germany. After some teething problems, which were quickly solved, operations have functioned smoothly since then. In May 2010, market coupling on Baltic Cable was included, proving good results and stable operations from the beginning.

Within the first year in operation, more than 9 TWh were traded on the two interconnectors between Denmark and Germany and on Baltic Cable between Sweden and Germany. 92% of the transferred electricity was sent in the right direction in line with the price signal, flowing from the low-price area into the high-price area. Flows in the seemingly wrong direction are mainly due to ramping constraints, currency conversion and rounding issues, which are inherent to volume coupling. Ramping is a restriction of the electricity flow when it changes direction between two hours. This is applied for security reasons on many interconnectors.

Market prices in the different areas have converged significantly through tight volume coupling. The average price differences between DK1, traded on Nord Pool Spot, and Germany, traded on EPEX, averaged around 1,40 €/MWh. Likewise, the price spread between Sweden and Germany decreased to below 2,00 €/MWh. Since DK2 saw comparably high prices leading to large price spreads especially in winter 2009/2010, the average deviation between DK2 and Germany was around 9,00 €/MWh in the past twelve months.

Interim Tight Volume Coupling between CWE and the Nordic region

In January 2010, the transmission system operators and power exchanges in the Central Western European and Nordic regions agreed to introduce Interim Tight Volume Coupling between the two regions. EMCC was asked to develop the market coupling system, which was launched on 9 November, together with CWE price coupling.

Throughout the first year in operation, the cooperation between the power exchanges and EMCC has been very positive and this collaboration was strengthened even further during the development of ITVC. Coupling the two largest regional electricity markets, EMCC is pleased to be able to contribute to the advancement of market integration .

Successful joint launch of the Central West European price market coupling and the Central West European-Nordic tight volume coupling

The partners of Central Western European (CWE ) and Nordic countries  are pleased to announce that a decisive step towards the integration of the European electricity market has been taken. This innovation entails the simultaneous launch of two new initiatives on 9 November: the CWE price market coupling and the CWE-Nordic region Interim Tight Volume Coupling (ITVC). European consumers will thus benefit from the economic optimisation resulting in a more efficient use of the power system in the region, convergence or equalization of prices, improving social welfare and security of supply.

The market coupling method, developed jointly by the power exchanges and the transmission system operators (TSOs), aims at a more efficient use of available cross-border capacities and further price harmonisation across the regions. It creates a single platform for day-ahead electricity trading, allowing power exchange members to find a counterpart in any of these countries without taking care of cross border capacity reservation.

The first initiative launched, the CWE price coupling, covers Belgium, France, Germany, Luxembourg and the Netherlands. It is based on a coordinated capacity calculation performed by the transmission system operators and a coordinated price calculation performed by the power exchanges.

The second initiative launched, the Interim Tight Volume Coupling solution, is based on the existing EMCC (European Market Coupling Company) tight volume coupling model connecting the German borders, and thus as of now the entire CWE region, with the Nordic market via the interconnectors between Germany and Denmark and Sweden respectively. Further information on the integration of the NorNed interconnector into this common North-West European power market will be given on 19 November.

On the first day of operations, day-ahead baseload prices set by the power exchanges in the CWE region have fully converged in all hours, recording a day-ahead baseload price of 51.21 €/MWh for electricity delivered for 10 November. Day-ahead baseload prices set in Nord Pool Spot’s Elspot market for the two Danish bidding areas were 51.69 €/MWh and 51.75 €/MWh and for Sweden 51.34 €/MWh. Flows on ITVC interconnectors between Nordic and CWE areas were fully utilised within 23 hours. Ramping constraints were considered according to market rules as usual.

The two initiatives integrate a day-ahead market of 1,816 Terawatt hours of power production, being the largest of its kind in the world and covering approximately 60% of electricity consumption in Europe. This result has been achieved thanks to the close cooperation between the 17 partners involved.

About Price Coupling:
Price coupling between different countries allows creating a single exchange zone – and consequently single price zones when interconnection capacities do not limit cross-border power exchanges. It contributes to improve the market liquidity and participates in the creation of a single European electricity market. Nord Pool Spot have organised price splitting since the start in 1993 and in 2006, price coupling was first implemented between France, Belgium and the Netherlands.

About Volume Coupling:
Volume coupling is a coordinated day-ahead auction involving two or more power markets. Cross-border volumes computed by an Auction Office are transferred to the power exchanges, which consider them as price inelastic bids into their local system. The calculated flows are based on anonymous order books and the available transmission capacities, while the pricing authority remains with the involved power exchanges. Volume coupling was introduced on the Nordic-German border in November 2009.

CWE, EMCC and Nordic Parties

We hereby report to you on the status of the launch of the CWE price coupling combined with the CWE-Nordic Interim Tight Volume Coupling (ITVC).

On behalf of the project partners, we are pleased to report that the required five days of  “end to end” tests have been completed successfully, and that the combined CWE-ITVC launch date of 9th November is now confirmed.

As mentioned within the last status, the testing phases of step 2 including NorNed cable have been delayed due to the extensive testing on step 1 the last weeks. The involved TSOs and PXs are now drafting an updated implementation plan for ITVC including NorNed.

We will come back to you with the status latest on 19th November 2010.

We hereby report to you on the status of the launch of the CWE price coupling combined with the CWE-Nordic Interim Tight Volume Coupling (ITVC).

On behalf of the project partners, we would like to report the following:

1. The combined CWE-ITVC launch is targeted on 9th November 2010.

2. We have agreed that a last testing is needed. Subject to successful five days end to end final testing from Sunday 31st October to Thursday 4th November, a final go / no-go decision will be taken on 5th November.

3. In case of a no-go decision next Friday, the parties have already agreed to the fall-back launch date of 30th November or 7th December 2010 to be determined as early as possible, subject to regulatory acceptance.

The testing phases of step 2 including NorNed cable are impacted by this revised step 1 planning. This is expected to have implication for the launch date of step 2 which now will be at the latest 18th January 2011, subject to satisfactory completion of testing.

We will come back to you with the status on 5th November 2010.

In line with EPEX's launch of the ETS trading system, EMCC also launched a new system on 28th September.

Amid the development of the inter-regional tight volume coupling between the CWE and Nordic regions, it had become necessary to adapt EMCC's application, algorithm and interfaces to ETS.

"The calculation with the newly deployed system worked perfectly and we consider this as a positive signal for the start of CWE-Nordic volume coupling", Enno Böttcher, Managing Director of EMCC, commented. CWE-Nordic coupling is scheduled to start on 9th November 2010.