emcc: Press Releases

The results of the first 25 days of market coupling on the Danish-German border are in line with expectations and prove even better results than the preceding tests had anticipated.

The desired effect of market coupling, namely the convergence of prices between coupled areas, has set in. Since the relaunch, the average price difference between EPEX Spot and Nord Pool Spot on DK1 decreased significantly to 4.21 €/MWh. In the period from 01.01.-08.11.2009 the average price difference were 8.97 €/MWh. On DK2, the delta of the past 25 days was 6.05 €/MWh, in the previous period 8.14 €/MWh.

In 46% of all coupled hours, prices in Denmark and Germany are nearly identical. In comparison, in the period from 01.01.-08.11.2009 the prices were identical on DK1 in 2.56% and on DK2 in 2.35% of all hours.

This positive conclusion is hampered by two incidents: firstly, market coupling for delivery date 11th November had to be stopped after a technical failure; secondly, EMCC was forced to set the flows in six hours to zero for delivery on 23rd November. This was in accordance with the announced procedure in case of sell curtailment in Denmark and the indication of negative prices in Germany.

Utilisation and correct flow direction in line with expectations

In volume coupling prices are calculated and published by the local exchanges and flows are calculated by the market coupling office, considering the overall optimisation of a larger area. Thus, it is an inherent feature of volume coupling that the prices calculated by the market coupling office and the prices calculated by the local exchanges cannot always be completely identical. Some differences in the price determination between an exchange and EMCC may result in adverse flows, meaning that the electricity does not flow in the correct direction from the low-price area to the high-price area.

The determined flows during the first 25 days of Nordic-German market coupling were better than expected with 90.5% of the total cross-border flow in accordance with the price signal. As communicated prior to the relaunch, smaller adverse flows with minor price deviations of < 0.20 €/MWh occur occasionally. On DK1, the share of minor adverse flows was 8.1%, on DK2 it was 7.2% of all flows. However, these minor adverse flows only account for 0.06% of the realised congestion revenue.

Price deviations

Minor price deviations between EMCC and the power exchanges are due to currency conversion, rounding procedures or ramping. Larger price deviations occur very seldom. On DK2 on 1st December in the hour 19-20, we have seen a combination of ramping, slightly different block bid selection and a tight market situation in Denmark as there was no import from Sweden.

Deviations can also be caused by the fact that EPEX Spot and Nord Pool Spot have different price caps. Since EPEX calculates in a price range of -3,000 €/MWh to +3,000 €/MWh and NPS has a range of -200 €/MWh to +2,000 €/MWh, EMCC has to apply the lowest common denominator of both exchanges, which lays in the interval between -200 €/MWh and +2,000 €/MWh.

Since price deviations cannot be avoided in volume market coupling, EMCC and its shareholders are committed to develop the current volume coupling into a price coupling scheme in due time.
Decoupling in case of curtailment of sales offers in Denmark

In case too much energy is offered for sale at the exchange in Denmark, the sales offers have to be curtailed. This is referred to as curtailment. In case EMCC’s calculation shows negative prices below
-200 €/MWh in Germany and curtailment of sales offers in Denmark, the markets will be decoupled. The involved TSOs and power exchanges agreed upon this procedure in order to avoid spreading of curtailment to adjoining areas and thus protect market participants. This situation occurred in market coupling for delivery day Monday 23rd November when EMCC reduced flows on the DK1 - German border to zero from 00-01 to 05-06 hours.

In order to avoid manual decoupling, a technical solution is currently being developed.

Processes in line with agreed procedures

With one sole exception, the market coupling process within EMCC has worked in line with the agreed and published procedures. The average calculation time was 6:30 minutes. Therefore, the market coupling orders are generally sent within the agreed deadline of 12:30 a.m.

Also in case of an incident, operations are in line with agreed deadlines. However, EMCC and the two exchanges are currently working on more aligned communication procedures. Both EPEX and NPS alternately perform the daily market coupling operation on behalf of EMCC.

During the first days of market coupling, we saw mixed results as the switch from simulation environment to live operation produced flaws on Tuesday.

What happened?
On Monday and Wednesday, the market coupling process worked in line with expectations.

On Tuesday, the market coupling system experienced a calculation timeout which was due to a technical failure of a parameter. Shortly after the decision to decouple, the IT vendor fixed the failure.

The algorithm itself was not affected. This was confirmed by another calculation in the productive system, which we performed with original trading data from 10th November. This calculation brought appropriate results. Furthermore, these results were validated by another calculation in the simulation environment, which brought identical results.

Although an incident management procedure had been agreed on, yesterday’s events indicated that it was not equally understood by all involved parties. Therefore all parties agreed to redefine the incident management timeline shortly.

Is Tuesday’s failure related to the problems experienced last year?
No, EMCC has improved both the algorithm and the volume coupling model, which provide Nord Pool Spot with the elasticity of the German market. Thus, the calculation algorithm works appropriately. Last year the algorithm was not aligned closely enough to the power exchanges’ systems and constraints.

Why was Tuesday’s failure not anticipated?
Extensive tests have been carried out together with EMCC’s IT vendor and the involved power exchanges. Moreover, the tests were accompanied by external analysts. In more than 5,000 hours tested, this had not occurred.

Will this happen again?
No. The IT vendor has made sure that the flaw has been resolved. However, it should be considered that minor problems may occur when launching new IT services, switching from simulation to live operation.

(How) will market coupling proceed?
EMCC and all shareholders are certain that volume market coupling on the Danish-German border is a first, important step towards a more global price coupling scheme.

For more information on the EMCC algorithm and our test procedures, please consult our website on www.marketcoupling.com

EMCC and its shareholders jointly decided to resume market coupling activities on the interconnectors between Denmark and Germany on 9 November. The decision was taken after consultations with national regulatory authorities, trading associations and market participants. Moreover, stable results of EMCC’s market coupling system were approved in a report by a consortium of RWTH Aachen University.

EMCC provides relevant information for market participants on its website on www.marketcoupling.com. Presentations from our market symposium on October 26, the report from Aachen University as well as incident processes and explanations of the concept of tight volume coupling are available as free downloads.

Explicit auctions for the link Germany-Western Denmark

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

European Market Coupling Company

European Market Coupling Company GmbH was established as central auction office for market coupling between Germany and the Nordic countries. The company carries out day-ahead congestion management services on the two interconnectors between Germany and Denmark, DK West (NTC of 950 MW north and 1,500 MW south) and DK East (NTC of 550 MW north and south).The aim is to improve market efficiency of cross-border congestion management based on implicit auctions. EMCC was founded in Hamburg in August 2008 as a joint venture of European Energy Exchange AG Energinet.dk, transpower stromübertragungs gmbh, Nord Pool Spot and Vattenfall Europe Transmission GmbH. It is designed to allow for the extension of its services to other interconnectors or markets.

EMCC plans relaunch of Danish-German market coupling for 9 November 2009

In view of several improvements of the market coupling system and very positive test results, European Market Coupling Company GmbH and its shareholders are planning the relaunch for 9 November 2009.

EMCC and its shareholders European Energy Exchange (EEX), Energinet.dk, transpower stromübertragungs gmbh, Nord Pool Spot (NPS) and Vattenfall Europe Transmission jointly decided to resume market coupling activities on the interconnectors between Denmark and Germany on Monday, 9 November 2009 for delivery date 10 November 2009. The decision was taken in due consideration of the market requirements and under the reservation of regulatory approval.

During the past months, the system was improved further and latest test results have been very positive. EMCC, EPEX Spot, NPS and EMCC’s have carried out extensive tests with historical and artificial data to approve the new configuration of the market coupling system. The quality of the improved system is confirmed by a report from external consultants. “We are confident that the system we have is the best possible solution we can get under a volume market coupling scheme,” Enno Böttcher, Managing Director of EMCC, points out. EMCC will use the coming weeks ahead of the relaunch for comprehensive market information.

Danish-German volume market coupling will increase efficiency and social welfare compared with currently applied congestion management methods. Given the fact that volume coupling is rather an approximation, EMCC’s tight market coupling is a first helpful and sensible step towards a more global price market coupling solution. Hence, EMCC and its shareholders have committed themselves to develop the current volume coupling into a price coupling scheme in due time. The CWE Market Coupling project and other initiatives will be approached in this respect.

European Market Coupling Company

European Market Coupling Company GmbH was established as central auction office for market coupling between Germany and the Nordic countries. The company carries out day-ahead congestion management services on the two interconnectors between Germany and Denmark, DK West (950 MW north / 1,500 MW south) and DK East (550 MW north and south).The aim is to improve market efficiency of cross-border congestion management based on implicit auctions. EMCC was founded in Hamburg in August 2008 as a joint venture of EEX, Energinet.dk, transpower, NPS and Vattenfall Europe Transmission. It is designed to allow the extension of its services to other interconnectors or markets.

Reprint free of charge, please forward a copy.

For further information, please contact:

European Market Coupling Company GmbH
Hopfenmarkt 31, 20457 Hamburg, Germany
www.marketcoupling.com

Vivien Neubert
PR Manager
phone: +49 160 441 64 53

Enno Böttcher
Managing Director
phone: +49 40 369 054 60

 

Relaunch of market coupling between Denmark and Germany shifted into Q3 2009

European Market Coupling Company GmbH and its shareholders jointly decided to shift the relaunch of market coupling between Denmark and Germany into the third quarter of this year. The reason is that it was necessary to make structural changes in the market coupling scheme, leading to a higher IT complexity.

EMCC and its shareholders European Energy Exchange (EEX), Energinet.dk, transpower stromübertragungs gmbh (formerly E.ON Netz), Nord Pool Spot (NPS) and Vattenfall Europe Transmission have jointly decided to shift the relaunch of market coupling between Denmark and Germany into Q3 2009. This decision was taken after consultation with the Danish, German and Norwegian regulatory authorities. According to all involved parties, the algorithms of EMCC and the two involved exchanges are very well aligned. However, the parties decided to elaborate the market coupling scheme further to secure efficient performance. Since this requires changes both in the market coupling system and the coordination between EEX, NPS und EMCC, the shift into Q3 had become necessary. “As communicated last week, we tried hard to uphold our aim to relaunch in Q2, “ explains Enno Böttcher, EMCC’s Managing Director. “However, the new processes and IT features are vital and therefore the relaunch needs to be shifted into the next quarter.”

The solutions that are now being implemented are of a rather structural nature as it was acknowledged that a pure replication of the algorithms did finally not lead to satisfactory results. The markets proved to be more challenging than expected. In fact, market coupling between Denmark and Germany is not only the optimisation of two isolated interconnectors but actually the optimisation of the whole Nordic market including all its interconnectors and the German market. “The complexity of volume coupling between Denmark and Germany was underestimated by all involved parties,” Böttcher explains, adding that they are well under way to establish satisfactory procedures and system design.

European Market Coupling Company

European Market Coupling Company GmbH was established as central auction office for market coupling between Germany and the Nordic countries. The company carries out day-ahead congestion management services on the two interconnectors between Germany and Denmark, DK West (950 MW north / 1,500 MW south) and DK East (550 MW north and south).The aim is to improve market efficiency of cross-border congestion management based on implicit auctions. EMCC was founded in Hamburg in August 2008 as a joint venture of EEX, Energinet.dk, transpower, NPS and Vattenfall Europe Transmission. It is designed to allow the extension of its services to other interconnectors or markets.

Reprint free of charge, please forward a copy.

For further information, please contact:

European Market Coupling Company GmbH
Hopfenmarkt 31,
20457 Hamburg,
Germany

Relaunch Process for Market Coupling well Advanced

Committed team work within European Market Coupling Company (EMCC) and its shareholders have led to a very good progress of the relaunch project. However, EMCC decided to shift the relaunch date into Q2.

A task force meeting at the end of February confirmed that the project plan for the relaunch of market coupling on the Danish-German border is in time. However, in order to be on the safe side, the last steps, final testing and the migration of the system, will be allowed even more time than originally planned , especially as there are Easter holidays in-between. “We want to be even more cautious,” explains Enno Böttcher, Managing Director of EMCC. “The quality of the system is our
highest priority.”

A team of about 30 people is involved in the relaunch project, which is divided into analysis, specification, implementation, testing and migration phase. Moreover, the team was extended by two external analysts to support the testing and to certify the system’s readiness before its relaunch. “We are very satisfied with the progress of our relaunch process as the test results are of a high quality.”

Unexpected market coupling results caused by small deviations between the algorithms of the exchanges and EMCC had led to the temporary suspension of market coupling between the Danish and German border in October last year. The exact relaunch date will be communicated four weeks head in order to allow all market participants enough time to prepare.

European Market Coupling Company

European Market Coupling Company GmbH is the central auction office for market coupling between Germany and the Nordic countries. The company carries out day-ahead congestion management services on the two interconnectors between Germany and Denmark, DK West (950 MW north / 1,500 MW south) and DK East (550 MW north and south).The aim is to improve market efficiency of cross border capacity trading. The company was founded in Hamburg in August 2008 as a joint venture of Nord Pool Spot, European Energy Exchange, Vattenfall Europe Transmission, E.ON Netz and Energinet.dk. EMCC is designed to allow the extension of its services to other interconnectors or markets.

For further information, please contact:  

European Market Coupling Company GmbH
Hopfenmarkt 31
20457 Hamburg
Germany

Vivien Neubert                                        
PR Manager                                            
phone: +49 160 441 64 53                      

Enno Böttcher
Managing Director
phone: +49 40 369 054 60

www.marketcoupling.com

Development of EMCC Market Coupling in Time

Since the temporary suspension of market coupling between Denmark and Germany in autumn last year, European Market Coupling Company GmbH (EMCC), its shareholders and suppliers have been working hard to make sure the renewed testing is on schedule. 

An extensive analysis following the suspension of market coupling in October last year showed that the unexpected market coupling results were caused by small deviations between the algorithms of the exchanges and EMCC. All reasons for those deviations were found and are now being implemented. Thus, the development of the renewed analysis and test phase has proceeded as planned.

During February both live and historical data will be tested in a live environment. However, a precise relaunch date cannot be communicated yet as this is dependent on the test results. “For us, it is much more important to make sure the system is reliable and produces proper results than to be overhasty and fix a relaunch date right now”, explains managing director Enno Böttcher. “I am sure it is in the interest of all market participants that we are very cautious.” After a Task Force meeting at the end of February, the migration will be initiated and it is expected that the relaunch date can be
scheduled and communicated to the market during calendar week 10.

During the first ten days of market coupling in September and October last year, the market had seen adverse power flows and unused capacity despite price differences. Therefore, EMCC had decided to suspend market coupling on the two interconnectors between Denmark and Germany temporarily.

European Market Coupling Company

European Market Coupling Company GmbH is the central auction office for market coupling between Germany and the Nordic countries. The company carries out day-ahead congestion management services on the two interconnectors between Germany and Denmark, DK West (950 MW north / 1,500 MW south) and DK East (550 MW north and south).The aim is to improve market efficiency of cross border capacity trading. The company was founded in Hamburg in August 2008 as a joint venture of Nord Pool Spot, European Energy Exchange, Vattenfall Europe Transmission, E.ON Netz and Energinet.dk, it is headed by 39-year old managing director Enno Böttcher. EMCC is designed to allow the extension of its services to other interconnectors or markets.
 
For further information, please contact: 
 
European Market Coupling Company GmbH
Hopfenmarkt 31
20457 Hamburg
Germany
 
Vivien Neubert
PR Manager
phone: +49 160 441 64 53                       

Enno Böttcher
Managing Director
phone: +49 40 369 054 60

www.marketcoupling.com