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15-minute Intraday Call Auction will help reveal the value of flexibility

Exchange Council deliberates on Flow-Based Market Coupling

Paris, 18 September 2014 – The Exchange Council of EPEX SPOT, at its latest meeting in Paris, underlined the importance of the upcoming 15-minute call auction on the German Intraday market in order to cope with the emerging flexibility challenges of power markets. Furthermore, the Council deliberated on the impact of Flow-Based Market Coupling on power trading.

Since the presentation of the Intraday call auction design for 15-minute contracts in Germany during the last Council’s session in June, EPEX SPOT has been making progress in its implementation. This new auction for 15-minute contracts will take place daily at 3 pm, before the opening of the continuous Intraday market for 15-minute contracts and it will cover the 96 15-minute contracts for the next calendar day from midnight on. 

15-minute contracts help fine-tuning portfolios after the Day-Ahead auction for hourly contracts at noon and facilitate trading for intra-hour variations in production and consumption. The 15-minute auction will be incorporated in the Intraday market segment, as it is held after the day-ahead nomination deadline in Germany. It will prove to be a valuable tool for market participants as it will help them fulfilling their balance requirements towards German transmission system operators (TSOs) already on the day before delivery. 

The already existing 15-minute prices that emerge on the continuous Intraday market remunerate more accurately flexible capacity able to respond to 15-minute variations in production and consumption. An auction would further support this idea by concentrating liquidity and creating a more robust price reference. “The determination of the right value of flexibility has become one of the major challenges of the European power market. With the new 15-minute Intraday call auction at 3 pm, we will be able to provide a clear price signal on 15-minute basis – and reveal the value of flexibility”, says Jean-François Conil-Lacoste, Chairman of the Management Board of EPEX SPOT.

The Exchange Council also discussed the envisaged reform of the Balance Responsible Rules on the German market. In this context, the Council urged that these should not hamper the liquidity of the Intraday market, in particular after the launch of the 15-minute call auction. The latter is scheduled to start in the first half of December 2014. New market parties which want to trade exclusively on the 15-minute auction will benefit from a reduced entrance fee. Furthermore, there will be a membership fee holiday for the first six months of the 15-minute call auction. EPEX SPOT will communicate in due time on the launch date.

Flow-Based Market Coupling in Central Western Europe (Germany, France and Benelux) has been in parallel run since January 2013. This new method allows TSOs to optimise cross-border capacity while preserving grid security. EPEX SPOT underlined that it is ready to start with Flow-Based as soon as project partners and regulators provide all necessary clearance.

The members of the Exchange Council welcomed the implementation of the Flow-Based methodology in the CWE region. “This is another step towards European power market integration”, says Dr. Bernhard Walter, Vice-Chairman of the Exchange Council. “The CWE region is the logical choice for this pilot project: It has shown to be perfect proving grounds for the power market in Europe.”
The third meeting of the Exchange Council in 2014 was held in Paris on 16 September 2014 and was chaired by Dr. Bernhard Walter, Senior Manager Market Design and Regulatory Affairs of EnBW AG.

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The Exchange Council of EPEX SPOT is an official body of the Exchange. 16 members and 7 permanent guests represent adequately the diversity of economic and corporate profiles that exists among the Exchange Members from various sectors: producers, power trading companies, transmission system operators, regional suppliers and financial service providers, as well as commercial consumers and academics. Its missions include in particular the adoption of the Exchange Rules and the Code of Conduct of EPEX SPOT and their amendments. The Exchange Council approves new trading systems as well as new contracts or market areas and approves the appointment of the Head of the Market Surveillance Office. It meets up quarterly.

The European Power Exchange EPEX SPOT SE operates the power spot markets for Germany, France, Austria and Switzerland (Day-Ahead and Intraday). Together these countries account for more than one third of the European power consumption. EPEX SPOT also acts as market operating service provider for the Hungarian Power Exchange HUPX and operates the coupling between the Czech, the Slovak, the Hungarian and soon the Romanian markets on behalf of the local Exchanges. It is a European company (Societas Europaea) based in Paris with branches in Leipzig, Bern and Vienna. Over 220 companies from Europe are active on EPEX SPOT. 249 TWh were traded on EPEX SPOT’s power markets in the first eight months of 2014.