Power Exchanges&Pools

December 23, 2011

Agenda

Market Models Products offered by PXs

MarketModels

MarketModels
Prerequisits forcreationofaMarket: Unbundling AbsenceofSinglestandardmarketmodel DeRegulation Competition Models: PowerPoolsorCentralizedmarket Bil Bilateral lContracts C Model M d lorDecentralized D li dmarket k

PowerPools

Pools
Onesided pool

Market operator forecasts demand and dispatch and gets offer price quantity pairs for supply all generating companies (such pools are referred to as Cost Based Pools)

When g generators are free to offer any yp price they y like ( (such p pools are referred to as Price Based

Twosided pools

Both Generation and Supply curves formed by Market operator and dispatched

PowerPools

Characteristics: AggregatedSupplyCurveformedbyallgeneratingcompanies Pricequantitypairprovidedbybuyersandsellers Marketoperatorforecastsdemandanddispatchesgeneratingunits Meritorderdispatchfollowed Cheapestgenerationgetspriorityregardlessofconstraints Incaseofcongestionoutofmeritgeneratorsasdispatchedto replaceinmeritgenerators Poolcanoperateadayaheadmarketoraclosetorealtimemarket

Types:

9CostBasedPools 9PriceBasedPools 9Producerss Pools(LT,ST,Spot)

9ConsumersPools 9DistributorsPools
7

PowerPools Advantages

Locational MarginalPricing(basedonmarginalcostofenergy) Congestioncostsnotsocialised Eachmarketplayerpaysforcongestioncaused Nodalpricesprovidessignals WholeoperationhandledbyMarketoperator IncreasedliquidityinZonalmarket Bilateralmarketscanbeadditionallyundertaken

PJM

Energymarket EnergypriceistheLMPoftheHub/Zoneoneisconnectedto
LocationalMarginal g Price=marginal g power p p price+transmission congestion+marginalloss Mayvarybasedongeneratordispatchedandcongestioninnetwork Dayaheadforward(bothbuyersandsellers) Day D ahead h dScheduled S h d l d R Reservemarket k f for30minute i ,offer ff based b dfor f gencos,afterPJMforecastofdayaheadmarket Operatingreserves=offerbasedpriceforgencos Realtimebalancing=5minutebasedongridcondition

FinancialTransmissionrights
Hedgetransmissioncongestionpricerisk Pricerisk=LMPGencoLMPDiscom AncillaryServices synchronizedreserves,black/brownstartetc

Poolvs Exchange
Pool CentralizedSecurityConstrained economicdespatch LMP=NodalMarginalPrice MarginalTransmissionLossinLMP CapacityMarket Discom Regulatedmonopoly Explicittransmissionauction Derivativesnotliquid Exchange

Marketbaseddispatch ExchangePricedetermines MarginalPrice TransmissionCharge=PostageStampor NodalPricing ThroughFinancialfutures Retailer=retailcompetition ImplicitTransmissionauction LiquidDerivatives Poolprice CFD

ProductsworldwideinPower&Energy

EuropeanMarket
Sr.No. 1 2 3 4 5 6 7 8 9 10 11 12 Exchange NordPool OMEL APX POLPX EEX OPCOM Powernext S thPool South P l EXAA GME B lP BelPex PXE YearofEstablishment Spot 1995 1995 1998 1998 1999 1999 1999 2000 2000 2000 2000 2005 2001 2001 2001 2002 2002 2002 2002 2004 2006 2006 2007 2008

NordPool

Forwards
Base Load Month, Quarter and Year Peak P kL Load d Month, M th Quarter Q t and d Year Y

Futures
Base Load 1 day and 1 week Peak Load 1 week

Options
Base Load 1 or 2 quarters Base Load 1 or 2 years

Contract for Differences

Base B L d for Load f Oslo, O l Tromso, T St kh l Lulea, Stockholm, L l Sundsvall, S d ll Copenhagen, C h etc. t

* Reference price Nord Pool Spot Prices

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