Secondary Market with Transmission Capacities ČEPS, a.s. 11/2006.

Secondary MarketSecondary Marketwith Transmission Capacitieswith Transmission Capacities

ČEPS, a.s.ČEPS, a.s.11/200611/2006

Initial situation

• Regulation 1228/2003 EC requires the member states to define

rules allowing the secondary market with transmission capacities

• Already supported in coordinated auction:

– self-service capacity transfers

– capacity notice-board

• Not sufficient for the market:

– no rules for secondary trading

– no products (complicates matching between bids and calls)

– no anonymous environment

– no financial settlement

– etc.

• No secondary market with capacities is operated in the region

Initial situation

• Opportunity for common Auction office and TSOs:

– AO and TSOs has data about entities and capacities

– shared financial guarantees for primary and secondary market can be

applied

– common invoicing for primary and secondary capacities can be applied

– auction office can automatically register the realized transfer

• Auction office has the best background for organizing secondary

market

– maximum added value for market participants in contrast to any other

solution

– market opportunity for TSOs participating in the project

Basic principles of continuous market

• Definitions:

– bid – supply of capacity

– call – demand for capacity

– orders – bids & calls

• Continuous evaluation of received orders

– Continuous matching of bids and calls

– Non-matched orders are inserted into wait list

Orders

• Period

• Offered/requested amount of capacity

• Requested/offered price limit

– not mandatory – if not specified, bid is “without

price limit” which means:

• order has priority during matching process

• order is matched with the counter-order with the best

price

Products

Orders

Price curves

Possible schedule

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1. 11.

24. 12.

1. 12.

21. 12.

27. 12.

28. 12.

30. 12.

27. 12.

Transaction settlement

• Transaction is announced to primary auction

office immediately after matching

• Financial transaction is recorded

• Individual accounts – sum of all:

– credits – payments for sold capacity

– debits – payments for bought capacity

Financial Balance