OPCOM’S ROLE OOPCOM’S ROLE OPCOM’S ROLE PCOM’S ROLE … · 2012-07-04 · Buletinul AGIR...

Buletinul AGIR nr. 3/2012 ● iunie-august 1

OPCOM’S ROLE OPCOM’S ROLE OPCOM’S ROLE OPCOM’S ROLE

IN THE WHOLESALE ELEIN THE WHOLESALE ELEIN THE WHOLESALE ELEIN THE WHOLESALE ELECTRICITY MARKETCTRICITY MARKETCTRICITY MARKETCTRICITY MARKET

Rodica POPA, Cristina SETRAN, Victor IONESCU

REZUMAT. REZUMAT. REZUMAT. REZUMAT. Creat pentru a administra piata angro de energie electrica in conformitate cu legislatia primara si secundara in Creat pentru a administra piata angro de energie electrica in conformitate cu legislatia primara si secundara in Creat pentru a administra piata angro de energie electrica in conformitate cu legislatia primara si secundara in Creat pentru a administra piata angro de energie electrica in conformitate cu legislatia primara si secundara in vigoare, operatorul pietei a intravigoare, operatorul pietei a intravigoare, operatorul pietei a intravigoare, operatorul pietei a intrat in 2011 in cel det in 2011 in cel det in 2011 in cel det in 2011 in cel de----al doilea deceniu de activitate urmarind ca de fiecare data asumarea al doilea deceniu de activitate urmarind ca de fiecare data asumarea al doilea deceniu de activitate urmarind ca de fiecare data asumarea al doilea deceniu de activitate urmarind ca de fiecare data asumarea eficienta a rolului sau sub toate aspectele, pornind de la facilitarea tranzactionarii pe diferite orizonturi de timp prin preficienta a rolului sau sub toate aspectele, pornind de la facilitarea tranzactionarii pe diferite orizonturi de timp prin preficienta a rolului sau sub toate aspectele, pornind de la facilitarea tranzactionarii pe diferite orizonturi de timp prin preficienta a rolului sau sub toate aspectele, pornind de la facilitarea tranzactionarii pe diferite orizonturi de timp prin produse oduse oduse oduse bursiere lichide in vederea ajustaribursiere lichide in vederea ajustaribursiere lichide in vederea ajustaribursiere lichide in vederea ajustarii eficiente a portofoliilor, stabilirea unui pret de referinta solid si a semnalelor de pret i eficiente a portofoliilor, stabilirea unui pret de referinta solid si a semnalelor de pret i eficiente a portofoliilor, stabilirea unui pret de referinta solid si a semnalelor de pret i eficiente a portofoliilor, stabilirea unui pret de referinta solid si a semnalelor de pret pentru tranzactionarea la termen a energiei electrice, asumarea rolului de contraparte, asigurarea integritatii si pentru tranzactionarea la termen a energiei electrice, asumarea rolului de contraparte, asigurarea integritatii si pentru tranzactionarea la termen a energiei electrice, asumarea rolului de contraparte, asigurarea integritatii si pentru tranzactionarea la termen a energiei electrice, asumarea rolului de contraparte, asigurarea integritatii si transparentei pietelor administrate. transparentei pietelor administrate. transparentei pietelor administrate. transparentei pietelor administrate. CuvinteCuvinteCuvinteCuvinte cheie:cheie:cheie:cheie: energie electrica, piata angro, produse tranzactionate, decontare ABSTRACTABSTRACTABSTRACTABSTRACT: : : : Designed to Designed to Designed to Designed to administeradministeradministeradminister the wholesale electricity market in accordance with primary and secondary legislation the wholesale electricity market in accordance with primary and secondary legislation the wholesale electricity market in accordance with primary and secondary legislation the wholesale electricity market in accordance with primary and secondary legislation in force, the market in force, the market in force, the market in force, the market operator entered operator entered operator entered operator entered in 2011 in the second dein 2011 in the second dein 2011 in the second dein 2011 in the second decade of cade of cade of cade of this this this this activityactivityactivityactivity, aiming to continue to , aiming to continue to , aiming to continue to , aiming to continue to performperformperformperform its its its its rolerolerolerole in in in in an an an an effectiveeffectiveeffectiveeffective mannermannermannermanner, , , , begining with the responsibility to begining with the responsibility to begining with the responsibility to begining with the responsibility to facilitate facilitate facilitate facilitate the the the the trading on different time horizons by liquid products trading on different time horizons by liquid products trading on different time horizons by liquid products trading on different time horizons by liquid products made available to made available to made available to made available to all all all all participantparticipantparticipantparticipantssss for for for for their their their their portfolioportfolioportfolioportfolio managementmanagementmanagementmanagement purposepurposepurposepurpose, establishing a solid reference price and price , establishing a solid reference price and price , establishing a solid reference price and price , establishing a solid reference price and price signals for electricity signals for electricity signals for electricity signals for electricity traded on term markettraded on term markettraded on term markettraded on term market, acting as a counterparty, , acting as a counterparty, , acting as a counterparty, , acting as a counterparty, assuring the assuring the assuring the assuring the market integrity and transparency of market integrity and transparency of market integrity and transparency of market integrity and transparency of the administered marketsthe administered marketsthe administered marketsthe administered markets. . . . Keywords:Keywords:Keywords:Keywords: electricity, wholesale market, traded products, settlement

1. INTRODUCTION

The Romanian Power Market Operator ”Opcom” was

established through Government Decision No.

627/13.07.2000 regarding the reorganization of the

Electricity National Company CONEL, that was

published in the Oficial Gazette No. 357/31.07.2000,

being entrusted with the mission to sustain the market

liberalization process, being the main tool for the

implementation and strenghtening of the competitive

market for electricity by ensuring the needed

framework for transparent trading places to be

provided towards the licensed market participants.

Along with the primary legislation, the definition of

OPCOM current role have contributed the designed

regulatory framework and the National Regulatory

Authority for Energy secondary legislation to define

the specific activities: setting of the electricity price

and provision of optimal framework for its trading,

by providing conditions of transparency, anonymity

and uniformity. Over time, trading mechanisms have

been modernized and become more secure by

launching new instruments, through acting as a

counterparty by OPCOM, providing facilities for

trading environmental instruments.

OPCOM activity is focused on services for

centralized electricity markets organization and

management, on services for organization and

management of dedicated market for electricity

associated instruments (certificates) and settlement

services, as per the responsibilities asigned by ANRE

through the Commercial Code and in force

regulations, through the license granted by the

competent authority, as well as through the

responsibilities established by Ministry of Economy’s

orders and regulations.

2. PRODUCTS MADE AVAILABLE TO MARKET PARTICIPANTS

Markets operated by OPCOM are offering to market

participants the opportunity for trading electricity for

immediate and forward delivery, the time horizon

covered by the products available to participants

Buletinul AGIR nr. 3/2012 ● iunie-august_____________________________________________________________________________________

9

WORLD ENERGY SYSTEM CONFERENCE – WESC 2012


starting from the very long term (term contract) to

very short term (spot contract).

Fig. 1 Time horizon covered by products traded

inside OPCOM

2.1. Centralized market for bilateral contracts

for electricity (CMBC)

Centralized market for bilateral contracts for

electricity (commercialy launched on 01.12.2005)

enable participants trading electricity through public

auctions, based on tailor made offers/bids, defined by

market participants for delivery periods longer than a

month and unlimited as maximum delivery period.

All working days during the year are trading days.

Market participants are able to express interest in

buying and / or sale of electricity by the offer to

purchase at a maximum price or by minimum price

offers for sale whose characteristics in terms of

quantity offered, delivery period, the start date of

delivery and tender session opening price, are

proposed by the initiators of auction sessions. The

initiators also propose as well, together with the

offer, the contract to be signed in case of bid/offer

awarding.

Trading mechanism is based on the electronic

auctioning through open call auction.

0

2.000

4.000

6.000

8.000

10.000

12.000

2006 2007 2008 2009 2010 2011*

TWh

%

All time high 4 TWh(excepting 2006)

All time high 7% (excepting 2006)

from domestic consumption

Fig. 2 Term contracting. Volume and share

development 2006 – 2011

2.4

12.1

15.8

22.6

7.8

8.6 9.7

Fig. 3 Term contracting (CMBC). Yearly Average

Price 2006 – 2012

Attendance at the auction is allowed to market

participants that are posting tender guarantee in favor

of SC OPCOM SA, which are having a validity

period that is long enough to secure the contract

signing and submition to the SC OPCOM SA in

order to verify compliance of the signed contract with

the proposed contract proposed by the initiator of the

auction session, published together with the offer.

Management of the tender guarantees is performed

by SC OPCOM SA.

2.2. Centralized market for bilateral contracts

with continuous negociation - forward (CMBC-

CN)

This market (commercially launched on 15.03.2007)

provide to the market participants the possibility to

trade electricity through electronic auction sessions

organized on the electronic trading platform of SC

OPCOM SA, based on simple quantity-price

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Buletinul AGIR nr. 3/2012 ● iunie-august

_____________________________________________________________________________________WORLD ENERGY SYSTEM CONFERENCE - WESC


bids/offers for standard instruments listed by SC

OPCOM SA, for standard delivery time longer than

one week (week, month, quarter, year and multiples

of these periods). Permanently are made available to

market participants 12 types of standard tools for 29

different delivery periods. All working days during

the year are trading days.

Market participants are able to express their interest

in buying and / or sale of electricity through offer to

buy or sell standardized in terms of offered quantity,

in term of delivery period lenght, delivery start date.

The principles applied for standardization are

approved by ANRE for this trading method.

Sessions’ initiators are the ones proposing the

auction session opening price. This price may be

negotiated during the continuous auction session.

Participants at the trading session are permanently

provided through the trading system screens with all

the information on quantities and prices offered for

sale, or for buying power, updated in real time.

The trading mechanism is based on electronic trading

through a combined mechanism of open call auction

state of the instruments and continuous trading state.

Fig. 4 Term contracting (CMBC-CN). Yearly

Average Price 2007 - 2011

The contract signed after auction session closing in

according with the trades concluded on the electronic

platform, is fully complying with the standard

contract approvaed by ANRE as Annex to the Order

No. 6/18.02.2011.

Attendance at the auction is allowed to market

participants that are posting tender guarantee in favor

of SC OPCOM SA, which are having a validity

period that is long enough to secure the standard

contract signing and submition to the SC OPCOM

SA in order to verify compliance of the signed

contract with the standard contract approved by

ANRE. Management of the tender guarantees is

performed by SC OPCOM SA.

2.3. Day Ahead Market (DAM)

The Day Ahead Market for electricity (commercialy

launched on 30.06.2005) is offering to the wholesale

market participants the possibility to balance their

own portfolio with the delivery obligation with one

day in advance than the delivery day, as well as the

possibility to benefit from the market opportunities

closet o the delivery moment. The participation in

this market is permited to all license owners

registered as market participants to DAM (producers,

suppliers and network operators).

The activity in this market administrated by OPCOM

is deployed on each calendar day an dis ensuring the

framework for the conclusion of firm transactions for

the hourly delivery of the electricity in each of the 24

intervals of the next day.

The trading mechanism is based on the closed

auction principles, the trading price (market closing

price) is the one reflecting the crossing point between

the agregated sell and buy curves that are established

for each of 24 hourly intervals of the next day.

Fig. 5 Spot price and volume. Yearly average 2005 -

2011

OPCOM is fulfilling starting with 2008 the

counterparty role for the electricity trades concluded

on DAM, this mechanism being aimed to ensure not

only a liquid but also safe trading activity.

0

1.000

2.000

3.000

4.000

5.000

6.000

7.000

8.000

9.000

2005 2006 2007 2008 2009 2010 2011*

TWh

%

All time high 4 TWh

All time high 7% from domestic consumption

Fig. 6 Volume and share development 2005 - 2011

_____________________________________________________________________________________OPCOM’S ROLE IN THE WHOLESALE ELECTRICITY MARKET


11



For each DAM participant, based on the trades

concluded, OPCOM is setting the related physical

notifications which are put at the disposal of the

Transmission System Operator as well as to

Balancing Responsible Parties (BRP) to which the

market participants are registered.

2.4. Adjustment market

Adjustment market (commercialy launched on

25.07.2011) is representing a component of the

electricity wholesale market on which are concluded

firm hourly trades for electricity to be delivered next

day, the gates opening time for this market being

after the moment when the trades for electricity

concluded on Day Ahead Market were confirmed.

0

50

100

150

200

250

300

350

DAM prices IDM prices

DAM-IDM average prices correlation[Lei/MWh]

Fig. 7 DAM-Adjustment Market – Average prices

correlation 2011

a The activity in this market is deployed on each

calendar day an is offering the possiblity that trades

for hourly delivery on each of the 24 hourly intervals

of the next day to be concluded.

By deploying daily trading operations between the

moment when the DAM session closing and until

half of hour before the gates closing for physicla

notifications submission, the adjustment market is

offering not only to the participants the possibility for

a suplimentary adjustment of the contractual

positions but also to the Transmission System

Operator a tool for diminishing the needs for

balancing power and in this way for ensure safe

operating and quality conditions of the national

energy system.

Trading mechanism is based on the electronic trading

through open call auction, respectively the hourly

offers are ranked in order to be matched. The

matching rules are: buy price higher or equal with the

sell price, sell price lower or equal with the buy price.

All the sell orders that are fulfilling the matching

conditions are matcehd and are concluding trades at

the related buy orders price.

Similar with its role in the Day-Ahead market,

OPCOM acts as counterparty in transactions set in

the adjustment market, the participants benefits being

evident: guaranteed payments, reduced number of

bills, anonymity ensured also in settlement not only

in trading process.

For each participant on the adjustment market, based

on the trades concluded, OPCOM is setting the

related physical notifications which are put at the

disposal of the Transmission System Operator as well

as to Balancing Responsible Parties (BRP) to which

the adjustment market participants are registered.

The adjustment market represents the first stage of

intraday market development that in its final phase of

implementation will be open for trading 23 hours per

day, 7 days per week, 365/366 days per year and will

offer the oppportunity to conclude trades through

each 24-trading instruments defined for each calendar

day.

The continuous trading will be the mechanism

implemented in this final stage of development.

2.5. Centralized Green Certificates Market

(CGCM)

In Romania, the mechanism to promote electricity

generation from renewable energy is the mandatory

quotas system, which means that each suppliers of

electricity to final consumers is obliged to purchase a

certain number of green certificates and to prove it.

The green certificates represent an additional gain

received by producers for "clean energy" delivered in

the network, the green certificate price being

determined by market mechanisms, namely the

centralized market of green certificates (PCCV)

organized and managed by SC OPCOM SA and the

bilateral contracts market for green certificates.

The trading mechanism applied in the Centralized

Green Certificates Market (launched commercially at

16/11/2005) is based on the closed auction principles,

the trading price (market clearing price)

corresponding to the intersection point of the sale and

purchase curves. For each market participant, based

on the transactions concluded, SC OPCOM SA sets

corresponding trading confirmations and settlement

notes including the values of payment obligations /

collection rights for each participant.

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0

50.000

100.000

150.000

200.000

250.000

300.000

350.000

400.000

450.000

2005 2006 2007 2008 2009 2010 2011

CV%

Fig. 8 Number of GCs and share development 2005-

2011

In the Green Certificates Market, SC OPCOM SA

fulfills its role as administrator of the Register of

Green Certificates, this being an electronic document

when all the green certificates issued by the

Transmission System Operator and all transactions

between market participants are recorded.

2.6. Trading Platform for Emission

Certificates (TPEC)

The Trading Platform for Emission Certificates

(TPEC) provides the centralized market place for

trading of emission of greenhouse gases in conditions

of transparency and uniformity. Trading days are all

working days.

The Regulation concerning the organisation and

functioning of the Trading Platform for Emission

Certificates, approved by the Minister of Economy,

Trade and Business Environment, creates the

regulatory framework to organize the trading

sessions, these can being scheduled for each offer

proposed by a TPEC participant to sell or buy

emission allowances.

Trading mechanism is based on the electronic

auctioning through open call auction.

The participation in the auction is allowed to market

participants who post the banking guarantee pledged

in favour of SC OPCOM SA. The validity period of

the posted guarantee must cover the whole period

between the trade confirmation, signing of bilateral

agreement proposed by the initiator together with the

published offer, and submitting it to SC OPCOM SA

in order to verify the compliance with the published

contract. The management of guarantees is made by

SC OPCOM SA.

2. SERVICES TOWARDS MARKET PARTICIPANTS – SETTLEMENT OF THE ELECTRICTY TRANSACTIONS

OPCOM acts as settlement operator for the following

markets:

- Day-Ahead market,

- Adjustment market,

- Balancing market, organized and administered by

Transmission System Operator (CNTEE

Transelectrica SA).

Also, SC OPCOM SA has the responsibility to

determine the Balancing Responsible Parties’

Imbalances and to calculate and redistribute in a

monthly basis the values of costs / income resulted

from the balancing of the national electricity system.

SC OPCOM SA acts as counterparty in the trades

concluded in the Day-Ahead Market and Adjustment

Market, role involving the following main activities:

administration of the central accounts opened to the

Central Bank; setting the payment obligations and

collection rights in a daily basis for the participants in

both markets and issuing the daily settlement

statements; in order to validate the purchase offers

submitted by the participants in these markets,

OPCOM calculates the daily value of posted

guarantee by each participant, taking into

consideration al the liabilities assumed and still

unpaid; on each banking day, the issuance and

transfer to the central bank account of the direct debit

instructions / payment orders for participants with net

position of buyer / seller, in line with the respective

values of settlement notes; issuing and sending

monthly invoices for electricity transactions, as well

as the validation of the invoices received; achieving

offset activity of the mutual payment

obligations/collection rights between OPCOM and

participants concerned, as required by law.

2008 2009 2010 2011

The value of Payment Orders issued 160 260 373 545

Number of Payment Orders 5.933 10.638 10.520 13.448

0

100

200

300

400

500

600

[mil Euro]

Fig. 7 Payment Orders 2008 - 2011

_____________________________________________________________________________________OPCOM’S ROLE IN THE WHOLESALE ELECTRICITY MARKET


13



For the markets where Transmission System

Operator acts as counterparty, the following

activities are carried out mainly by OPCOM to settle

the transactions: establishing the payment obligations

and collection rights for balancing market

participants, determining internal congestion

management costs, calculating of the price for deficit

/ surplus of energy, determine the payment

obligations and collection rights for the notification

imbalances, determining the value of quantitative

imbalances of each balancing responsible party;

calculation and redistribution the values of costs /

income resulted from the balancing of the national

electricity system.

3. CONCLUSIONS

According the theory, the reliability and consistency

of the reference price and price signals for different

time horizons of the future delivery are supported

especially by relevant liquidity exceeding the

thresholds generally accepted and by the number of

participants continuously increasing.

We strongly believe that trading of more than 25%

from the domestic consumption through OPCOM

products gives us the legitimate right to emphasize

that prices set in the centralized market for spot and

forward electricity delivery are relevant and reliable.

All products made available by OPCOM,

continuously improved and developed are intended to

meet the needs and opportunities of the participants

joining OPCOM.

About the authors

Rodica POPA, Programme Director, Projects Development and Implementation

OPCOM, 16-18 Hristo Botev Blvd., 030236, Bucharest 3, Romania

email:[email protected]

Cristina SETRAN, Programme Director, Projects Development and Implementation

OPCOM, 16-18 Hristo Botev Blvd., 030236, Bucharest 3, Romania


Victor IONESCU, CEO, Romanian Power Market Operator


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OPCOM’S ROLE OOPCOM’S ROLE OPCOM’S ROLE PCOM’S ROLE … · 2012-07-04 · Buletinul AGIR...

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