Prague, 2 april 2015

1. Introduction to Academic spectacles…
for EU power market design…
Prague Conference (2 April 2015)
Jean-Michel Glachant
Director Florence School of Regulation
& Loyola de Palacio Professor at European Univ. Institut

2. No spectacles & no doubt: 21

3. With spectacles & doubt: 64

4. www.florence-school.eu
What do I think about EU power market design today after 10
years of Barroso‘s Commissions?
4
Day-ahead
market
Intraday markets
Balancing market
Reserves/
ancillary services
markets
Explicit auctions
for transmission
capacity
Implicit auctions
Market coupling
Market splitting
Capacity markets
Bilateral / OTC
Long term
contracts
Flexibility market
Baseload
product
Peak load
product
Congestion
management

5. www.florence-school.eu
I will walk on 3 avenues only …
5
2- Wholesale
market repairs?
Pricing Day
Ahead
The new
frontier?
Innovation or
protection?
Pricing capacity
& energy?
Simplifying grid
access; etc
Internalizing grid
access in
pricing? Etc.
3- Retail market
inadequacy?
1- Achievement
Internal Market?

6. www.florence-school.eu
[I] Achievement of EU internal power market?
(I-1) Yes a kind of…
• 1.1 Pricing EU energy on Day-Ahead: a gigantic “market based” Merit
Order at continental scale
…of course grid access permitting…
• 1.2 Simplifying Access to EU Grid : coupling bids cross-border via “market
coupling” (operated by Grid Operators and PXs)
…but Day Ahead is not “real time” delivery; so many hazards…
• 1.3 Looking at “Balancing & reserves” procurement cross-border: the
next “frontier” of EU power market design
… well: what a rosy picture… indeed…
6

7. www.florence-school.eu
[I]Achievement of EU internal power market?
(I-2) Wait a minute…
• 1.1 Pricing energy Day-Ahead: MD assumes that energy bid forecasts at
Day Ahead is actual power market equilibrium
What if CCGTs replaced by WindMills &PV? What if “ generation capacity
adequacy” looses Day Ahead pricing as good proxy of value of capacity?
• 1.2 Simplifying Grid Access: MD assumes that actual “grid location” of
generation is not big deal if EU market is made of “zones” being coupled
What if not? If actual location of Generation on grids becomes key for EU
System Operation & for EU Market Equilibrium…
• 1.3 Looking at “Balancing & reserves” procurement cross-border: MD
assumes that procurement is “Zee” key in system balancing & reserves
What if not? If “demand” of system services is key. If we need players to
become highly responsible for / responsive to their action on system’s
balancing & reserves needs…
7

8. www.florence-school.eu
[II]Repairs of EU internal power market?
What?
• II.1 Better pricing capacity & energy at all time horizons?
* LT “Capacity Contracting”: next “big” piece added to EU market process?
** ST “Flexibility service”: Responsive Delivery & Risk Hedging “for last
minute horizon”?
• II.2 Un-Simplifying Grid Access?
*To put “actual grid operation constraints” as variable for RES sup. schemes
**Redefining “zones” / or going nodal in EU wholesale “market design”
• II.3 Internalizing full costs & benefits of “Balancing & reserves” in value
of individual usages of system by demand and by generation
*The “big thing” of EU power market design? Requires “Dynamic Pricing”?
8

9. www.florence-school.eu
[III]Retail: the new frontier of EU internal
power market? (1) Why?
• III.1 - Smartening everything?
*Apps to spotting & booking taxis, private cars, private B&B
**Companies enhancing car driving via software & sensors; parcel
delivery via drones
• III.2 - Millions of households already both producers & consumers?
*more receptive to smartening interactions GEN / Load?
**base big enough to make “business sensible” market target?
• III.3 – “Demand response” to become valuable for system operation
>> key “big paradigm shift” of EU power market design?
>> to upgrade Demand as actual center of EU electricity system?
9

10. www.florence-school.eu
Retail: the new frontier of EU internal power
market? (2) What?
• 1.1 - Smarten the pricing(s)? Dum price – dum guy?
*Fixed insensitive “feed-in” for PV/Wind ~to move to SystemFlex sensitive ?
**Fixed insensitive “consumer tariffs” ~to move to SystemFlex sensitive?
• 1.2 – Smarten access to distribution grids? Where is Demand @center?
*Unbundling Dstr.Grids to facilitate innovative entry ** Open access to data
within data protection **Create Dstr. Grids “System Flex incentive
regulation”?*** Go to more innovation? Or more Distrib. Grids protection?
• 1.3 –Embedding “Demand response” into “local energy systems”?
>> the newt “very big paradigm shift” of EU grid power design?
*Why “TSO central zoning & control” should keep system “central” if GEN
& Load match more & better when decentralized into “local systems”?
10

11. www.florence-school.eu
To conclude:
~The 20 years old project of EU internal market for CCGT
fleets is achieved.
~The EU market for RES isn’t. Lot of work… & of worries

12. www.florence-school.eu

13. www.florence-school.eu 13
Thank you for your attention
Email contact: jean-michel.glachant@eui.eu
Follow me on Twitter: @JMGlachant already 6 750 tweets
My web site: http://www.florence-school.eu