emcc: Press Releases

Relaunch of Market Coupling between Germany and Denmark

Concept

The main goal of the European Market Coupling Company (EMCC) is to improve market efficiency by optimized cross border capacity trading and to promote the integration of regional markets towards a European wide wholesale electricity market. 

The owners of the interconnectors between the Nordic and the Central European market area send their available capacity to EMCC on morning for the day-ahead trading. 

At noon the Power Exchanges EEX and Nordpool Spot receive bids from their trading participants for the respective market area and transmit the order books anonymously to EMCC.

EMCC calculates optimal flow for the given capacities based on the the anonymous order books. The algorithm of the EMCC system is based on models of the matching algorithm of EEX and Nordpool Spot and uses the economic welfare criterion which is in principle the maximization of the participants’ economic gains (buyers and sellers). EMCC submits price-independent bids/offers to both Power Exchanges corresponding to the calculated market coupling flow. The Power Exchanges take these additional bids/offers from EMCC into account and determine the final exchange prices according to the respective market rules and regulations. 

Reasons which led to the temporary suspension of EMCC market coupling

Unexpected deviations in flow- and price-calculations between the EMCC and the Nord Pool Spot system have led to non-optimal results regarding the utilizsation of the capacity between market areas. Furthermore, in some cases the power exchange prices for the Danish and German market areas did not correspond to the direction of the flows on the cross-border lines determined by EMCC’s bids/offers. 

Given these unexpected results EMCC and its project partners commonly decided to suspend market coupling temporarily. 

Results of the analysis of the effects 

EMCC started together with the Power Exchanges to analyse the results of the Market Coupling calculation and the price determination at the Power Exchanges. 

The analysis of the price determination methodology proved to be within the specification of each system. While the EEX Spot system maximises the executed volumes, the Nordpool Spot- and the EMCC-systems maximise the economic welfare. Thus, the EMCC system considers both market models operated by the Power Exchanges for optimising market coupling between Germany and Denmark. 

The thorough analysis of the matching algorithms of the three systems showed that the handling of regional constraints in the Nordic Market has been executed differently in the EMCC and NPS systems. 

These differences in handling occured in the case of:

• price determination methodology for neighbouring areas; 
• maximising the utilisation of capacity between neighbouring areas;
• allowing the market coupling flows only from low to high price area. 

Solution 

EMCC will adjust its system according to additional regional constraints in the Nordic market which have been identified during the current analysis phase. 

Expected relaunch of the EMCC Market Coupling 

We expect the relaunch of market coupling on the Danish-German border within the first quarter 2009.

For further information, please contact: 

European Market Coupling Company GmbH 
Hopfenmarkt 31
20457 Hamburg
Germany
 
Enno Böttcher
phone: +49 40 369 054 60
www.marketcoupling.com

Temporarily Suspension of day-ahead Market Coupling on Denmark West/Germany and on Denmark East/Germany

Re-introduction of daily explicit auction for Denmark West/Germany and re-activating of implicit auction on Kontek 

Unexpected deviations in flow and price calculations between the EMCC and the Nord Pool Spot system have lead to price differences between Germany and Denmark which do not correspond to the direction of the flows. Based on these differences and associated with some operational problems the spot market prices were delayed in the last days. 

EMCC has therefore decided together with all of its shareholders to temporarily suspend the market coupling via EMCC after today’s Market Coupling on the interconnectors between Denmark West and Germany/E.ON Netz and on Denmark East and Germany/Vattenfall Europe Transmission. EMCC resumes with intensive testing in order to solve the problems as soon as possible. 

The AC link between Western Denmark and Germany

Energinet.dk and E.ON Netz have decided to re-introduce the daily explicit auctions on the interconnector between Denmark West and Germany/E.ON Netz from 9th October 2008 (delivery day 10th October 2008). The procedures and auction rules will be those which have been used until 28th September 2008. They are published on the website of E.ON Netz (www.eon-netz.com).

The Kontek DC link between Eastern Denmark and Germany

The Market Coupling on the Kontek DC link between Germany and Eastern Denmark via implicit auction operated by Nord Pool Spot will be reactivated on 14th October 2008 for delivery on 15th October 2008. All participants who have previously traded in the KONTEK will have direct access their KONTEK portfolios as of Tuesday 14th October 2008. Until then the capacity for the Kontek DC link will be made available for ELBAS Intra-day trading.

We shall give information to the market in due time before the Market Coupling is introduced again.

For further information, please contact: 

European Market Coupling Company GmbH
Hopfenmarkt 31
20457 Hamburg
Germany
 
Enno Böttcher
phone: +49 40 369 054 60
www.marketcoupling.com

EMCC introduces security buffer on flows in order to enhance the German-Danish market coupling

The EMCC has analysed together with its IT supplier Deutsche Börse Systems the results of the last three days. High price sensitivity in the Danish market areas has lead to day-ahead plans with adverse energy flows (ie, flows from the high-price area to the low-price area) for several hours on the border between Denmark and Germany. 

In order to prevent this situation, EMCC has introduced a buffer parameter on the internal Nordic links between Norway/Sweden and Denmark in the EMCC market coupling system which may lead to a marginal lower flow on the German-Danish links (ie, the market coupling capacity may not always be fully used although there is a cross-border price difference). 

However, this remedy will reduce the problem with adverse flows and secures that the market coupling bids that are sent to the two power exchanges Nord Pool Spot and EEX reflects the price signals in Denmark and Germany.

EMCC will optimise the market coupling process further in order to realize the best possible solution considering the specific market situations in the coupled areas.

For further information, please contact: 

European Market Coupling Company GmbH
Hopfenmarkt 31
20457 Hamburg
Germany
 
Enno Böttcher
phone: +49 40 369 054 60
www.marketcoupling.com

Information on the EMCC flow results and price calculation in DK1 and DK2 for delivery date September 30th 2008.

The market coupling on the Kontek DC link between Germany and Eastern Denmark and on the AC
link between Germany and Western Denmark experienced some challenges yesterday, aligning flow
results and price calculations in some hours between DK1-GER and DK2-GER for delivery date 30th
September 2008.  

EMCC has with support from their IT vendor and the involved power exchanges analysed the planned
day ahead flow result for delivery date September 30th on the links Denmark West-Germany and
Denmark East-Germany and both short term and long term measures are taken to avoid these
incidents in the future.

Summary of incident: 

Especially hour 19-20 and hour 20-21 were affected where the EMCC and the Nord Pool Spot price
calculation diverged. Also other hours were affected, but to a less extent. During hour 19-20 and
hour 20-21 there were restrictions in capacities within Sweden (Cut 2 South) affecting the available
capacity towards Denmark and zero capacity from Norway to Sweden (NO1-SE). 

Following could be seen:
• There were extensive vertical overlaps in DK1 and in DK2
• There were limited capacity available from Northern Scandinavie towards DK1 and DK2

Measures to be taken:

The analysis has detected that the results are caused by a small, but different set up in the price calculation algorithm for the EMCC and Nord Pool Spot price calculation application. The Nord Pool Spot calculation system chooses a common price for two neighboring areas when capacity is not fully utilized whereas EMCC strictly applies the social welfare optimization principle. This will be aligned as soon as possible and tested thoroughly before put into operation. However, in order to secure short term and long term predictability for the market, the following actions will be taken.  
 
Short term solution: 
The short term solution will be to implement the day-ahead plans for energy flow in emergency situations as described in exchange information 61/2008.  
 
In order to avoid this incident in today’s price calculation, following will take place:

1. EMCC will determine the scheduled flow and bids on the two connections
2. EEX and Nord Pool Spot will then calculate Spot prices for respective market areas.
3. The flow and prices will be checked by the respective power exchanges in order to confirm correct flow between areas
4. If there are adverse flows and the price difference exceeds 10 EUR, the capacity used by EMCC between Denmark and Germany will be set to zero
5. If this affects the majority of the hours, the whole day ahead planned Capacity used by EMCC will be set to zero.
6. If not, the bids will be put into effect as planned. 

Long term solution:

The parties are agreeing that EMCC and the adjacent exchange market areas coupling shall have the same principles regarding algorithms and this will be put in to effect as soon as possible. 
 
For further information, please contact: 

Enno Böttcher, European Market Coupling Company GmbH, tlph +49 40 369 054 60
Toralf Michaelsen, European Energy Exchange AG, +49 341 2156 305
Dirk Biermann, Vattenfall Europe Transmission GmbH, tlph +49 30 51 50 44 25
Thorsten Dietz, E.ON Netz GmbH, tlph +49 921 915 4540
Klaus Thostrup, Energinet.dk, tlph +45 2333 8816
Anders Plejdrup Houmøller, Nord Pool Spot AS, tel. +45 28 11 23 00

On Monday 29 September, market coupling will be introduced on the Kontek DC link between Germany and Eastern Denmark and on the AC link between Germany and Western Denmark.

This implies that the day-ahead plans for the energy flow on these two links between Denmark and Germany will be calculated by EMCC. 29 September will be the first day, where these day-ahead plans are produced by EMCC.

The daily market coupling procedure EMCC will have two daily tasks:

1. For each of the two links and for every hour of the next day, EMCC will determine the scheduled flow based on the bids in the two spot markets of Nord Pool Spot and the European Energy Exchange (EEX) including the available capacity.
In order to calculate the scheduled flow, the day-ahead capacities for the links West Denmark-Germany and Eastern Denmark-Germany are submitted by Energinet.dk, Vattenfall Europe Transmission GmbH and E.ON Netz GmbH. EMCC will shortly after 12.00 CET receive anonymous order books from EEX and Nord Pool Spot.
2. After having calculated the scheduled flow for each hour of the next day on the two links, EMCC will submit a purchase bid to one power exchange’s bidding area(s) and a sales bid to the other power exchange’s bidding area(s) which reflects the scheduled direction of the flow on the two links. Thereby, EMCC will be the cross-border trader responsible for the EMCC flow between the two spot markets of EEX and Nord Pool Spot.

After having received the EMCC bids for Western-Denmark and Eastern-Denmark, Nord Pool Spot will calculate the Elspot prices, the traded Elspot volume per participant and the day-ahead plans for the energy flows between the Nordic bidding areas. For the EEX area, EEX will carry out the similar day-ahead auction calculation (Phelix).

Day-ahead plans for the energy flow in emergency situations In case of technical failure in the EMCC calculation system, the default EMCC bids to EEX and to Nord Pool Spot will be set to zero (ie. no EMCC trading). This means that if the market coupling fails, the day-ahead plan for the Kontek flow will be zero flow. For the link West-Denmark-Germany, the day-ahead nominations from players with cross-border capacity from the explicit auctions will constitute the day-ahead plans for the energy flow.

Dead band introduced on the Kontek link The involved capacity holders have decided to take grid losses into account by introducing a so called “dead band” on the Kontek link between Germany and Eastern Denmark. As decided by the capacity holders, this means the market coupling and EMCC’s calculation system will only use the Kontek capacity to the extent that the Kontek congestion revenue can finance the grid loss on the Kontek link. The consequence of this new “dead band” constraint is that it may result in zero or little capacity used although a price difference exists between the EEX Phelix and NPS Elspot prices in the relevant price areas (Germany and Eastern Denmark).

Explicit auctions for the link Germany-Western Denmark On the link Germany-Western Denmark, the explicit monthly and annual auctions will remain. On the Kontek link, there will not be explicit auctions.

Dear trading participants,

As already announced, the market coupling procedure with Denmark will be starting on Monday, September 29, 2008. In the course of the introduction of Market Coupling, EEX will also be launching 7-Day-Trading for the hourly auction for market area Switzerland and market area Germany/Austria.

Please note the following changes of trading procedures:

Shifting of the publication time of the auction results

The integration of the market coupling procedures with Denmark into the existing trading procedures leads to a shift of the publication time of the auction results for market area Germany/Austria. Starting from September 29, 2008 the auction results will not longer be published between 12:15 and 12:20 pm but between 12:35 and 12:45 pm. However, there are no changes to the publication time of the market results for market area Switzerland. As usual, the results will be published between 10:40 and 10:50 am.The deadlines for bid submission remain the same (10:30 am for market area Switzerland and 12:00 noon for market area Germany/Austria).

Introduction 7-Day-Trading

To be able run the market coupling process with Denmark also on weekends and holidays, EEX will introduce 7-Day-Trading. Therefore, starting from September 29, 2008 the hourly auctions for both market area Switzerland and market area Germany/ Austria will be run daily and exclusively for the next delivery day. However, bids may still be submitted for up to 14 days in advance. Please note that the price calculation will only be carried out one day before delivery (e.g. on Saturday for delivery Sunday and on Sunday for delivery Monday). The trading process on weekends and holidays will therefore no longer differ from the process followed on all other days. Please note that Friday, October 3, 2008 (Reunification Day) is the first day concerned by 7-Day-Trading.

Please make sure your company can be reached on weekends and holidays in case of an exceptional situation or for urgent requests from EEX or ECC. We kindly ask you to provide us the respective contact data (phone number(s)) via e-mail (powerspot@eex.com). The subject should read „Availability during weekends and holidays“.

Additional Auction for delivery day November 30, 2008

Please note that for delivery day Sunday, November 30, 2008 the procedure for running the hourly auction for market area Germany/ Austria for technical reasons will differ from the normal rule described above:

The hourly auction for market area Germany/ Austria for Sunday, November 30, 2008 will already be carried out on Friday, November 28, 2008 (together with the hourly auction for Saturday, November 29, 2008). This auction serves to determine the indices Phelix Base and Peak which will be taken into account for the calculation of the final settlement prices for the futures contracts concerned.

On Saturday, November 29, 2008 an additional auction for market area Germany/Austria for delivery Sunday, November 30, 2008 will be carried out which will be integrated into the market coupling procedure with Denmark. The prices calculated during this auction will not be considered for the calculation of any indices (Phelix Base or Peak) and therefore are no basis for the determination of final settlement prices of futures contracts.

The necessity of this special rule results from the fact that the Derivatives Market is not open for 7-Day-Trading and the final settlement prices for the futures contract expiring on the last exchange day (Derivatives Market) of the month concerned have to be entered into the trading system.

The hourly auction calculation for market area Switzerland is not affected by this special rule. On Friday, November 28, 2008, EEX will only run the auction for delivery on Saturday, November 29, 2008.

Organisation of the Market Supervision on Weekends and on Holidays

Furthermore, we would like to inform you that all market supervision tasks concerning the hourly auctions for power on weekends and holidays will be carried out by Powernext Market Operations. The Powernext support for trading participants on the days concerned includes all questions relevant for the hourly auction for power (market areas Switzerland and Germany/Austria).

Should you have any questions, please do not hesitate to contact our spot market hotline +49 (0) 341 2156 333.

Yours sincerely

Market Supervision Team
European Energy Exchange AG
Augustusplatz 9,
D-04109 Leipzig
Germany
Phone: +49 (0) 341 / 21 56-333
Fax: +49 (0) 341 / 21 56-111
E-mail: powerspot@eex.com
http://www.eex.com

The market coupling project between Germany and Denmark is now entering its final implementation stage. The five initiators of the project - Energinet.dk, E.ON Netz, VE Transmission, EEX and Nord Pool Spot – have agreed that the European Market Coupling Company (EMCC) will start the coupling of the Nordic and the German electricity market on 29 September 2008 for the next day.

It is planned to appoint Enno Böttcher as the managing director of the new, Hamburg-based company as soon as the company is founded. He will be in charge of the operative day-to-day business and the further development of the company. Since the beginning of April Enno Böttcher has taken over the management of this project in order to prepare the set-up of the company. Prior to this assignment, the 38-year Böttcher has worked as the head of corporate development at Energie-Handels-Gesellschaft EHA, a subsidiary of Vattenfall and REWE Group.

At the moment, the team in charge of the project is working on the introduction of a new IT system, which will be implemented and tested throughout the next months. Moreover, the required notification process at the European Commission is also under way and the project partners expect the positive result of this notification in July. Thereby all the necessary steps required will be completed within the time frame allocated until the official establishment of the company.

The new company aims at facilitating cross-border trading of power. Day-ahead market coupling permits an efficient use of the existing cross-border interconnectors and constitutes an important step towards the integration of the power trading markets in Europe. In the framework of market coupling so-called implicit auctions – the joint allocation of energy and cross-border transmission rights – will be carried out on a daily basis.

The company EMCC, its internal set-up and its IT system are designed to allow for extension of its services to other interconnections and/ or markets.