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EPEX SPOT's Trading Rules ready for NWE

Future flow-based solution will optimize CWE Market Coupling

Paris, 17/09/2013 – The implementation of the Target Model for the integration of Europe’s Day-Ahead power markets is on track. At its third meeting in 2013, the Exchange Council of the European Power Exchange EPEX SPOT discussed and approved several developments concerning the North Western European (NWE) Price Coupling and the flow-based solution in Central Western Europe (CWE) Market Coupling , which both are in accordance with the Target Model and milestones for the integration of power markets across Europe.

In view of the upcoming launch of the NWE Price Coupling, the Exchange Council reviewed several amendments of the Exchange’s Rules & Regulations. In detail, the following items were discussed:

  • EPEX SPOT will support the harmonization of price limits within the NWE Price Coupling project to -500 €/MWh and +3000 €/MWh. However, the market should be as less con-strained as possible in terms of prices. EPEX SPOT will therefore also suggest that price boundaries should be periodically reassessed.
  • The number of borders involved in the coupling concerning the area operated by EPEX SPOTs has been updated. In CWE, EPEX SPOT counted three of such borders (Ger-many-France, Germany-Netherlands and France-Belgium). NWE will add another three borders: France-Great Britain, Germany-Denmark and Germany-Sweden.
  • EPEX SPOT will also launch smart blocks in order to facilitate the optimisation and asset trading of power plants. These orders are depending on several conditions such as the execution of previous orders.

The members of the Exchange Council approved these amendments and support EPEX SPOT’s work within the NWE project. “Harmonization of trading rules is one of the core tasks for the creation of an efficient pan-European power market”, underlines Jean-François Conil-Lacoste, Chairman of the Management Board of EPEX SPOT. “With these modifications in place, EPEX SPOT complies with the European consensus developed by the Price Coupling of Regions initiative .” NWE is scheduled to launch in November 2013.

Furthermore, the members of the Exchange Council discussed the impacts of the flow-based solution, an improved way to calculate transfer capacities between several countries: It takes into account all the relevant physical constraints of the grid and allows transmission system operators (TSOs) to implement an efficient coordination at operational level. Consequently, the flow-based solution allows for more trading opportunities and for more efficiently using the existing transmission capacities with the same level of security of supply, as capacities are fully optimized and not split ex ante by TSOs.
The solution is developed by the TSOs and will be implemented in the CWE area in 2014. EPEX SPOT aims at raising awareness about the flow-based solution and its impact on price formation among the Exchange Members in order to ensure a smooth and transparent im-plementation.

“Once the remaining issues have been solved, the first-of-its-kind implementation of the flow-based solution in CWE Market Coupling is a logical step forward, because the region com-prises some of Europe’s most mature markets”, says Peter Heydecker, Chairman of the Ex-change Council. “The European Target Model foresees Price Coupling based on the flow-based solution and CWE will be once again the blueprint for Europe.”

The third meeting of the Exchange Council in 2013 was held in Paris on 16 September 2013 and chaired by Peter Heydecker, Head of Origination Gas & Power at Vitol.

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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: power trading companies, transmission system operators, regional suppliers, brokers 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.

EPEX SPOT SE operates the power spot markets for France, Germany, Austria and Switzerland (Day-Ahead and Intraday). Together these countries account for more than one third of the European electricity consumption. EPEX SPOT SE is a European company (Societas Europaea) based in Paris with a branch in Leipzig. 229 TWh were traded on EPEX SPOT’s power markets in the first eight months of 2013.