Successful Operation of PCR Solution: Power Exchanges Focus on Pan-European Power Market

19 February 2014 – Amsterdam / Brussels / London / Madrid / Oslo / Paris / Prague / Rome

Following a successful first two weeks of operation of the new day-ahead market coupling solution developed by the Price Coupling of Regions (PCR) initiative, the involved European Power Exchanges now look forward to cover more regions with the PCR solution. The aim is to create a single European day-ahead market.

The PCR solution went for the first time into operation on 4 February 2014 in North-Western Europe (NWE) and South-Western Europe (SWE), which account for about 75% of European electricity demand. Prices and net transfers are determined in a single calculation using the PCR Matcher-Broker (PMB) with its embedded algorithm “Euphemia”, based on the order books and available transmission capacities from the NWE and SWE regions. By allowing decentralised operations, PMB assures a high level of security.

The PCR project has been a major undertaking by the Power Exchanges involved (APX/Belpex, EPEX SPOT, GME, Nord Pool Spot, OMIE and OTE). Starting in 2009, the project has involved over 200 people from the participating Power Exchanges across Europe. The PCR project has been technically challenging given the many different markets involved, but has demonstrated what can be done with a positive spirit of co-operation.

The results of the market coupling over the first weeks have been very satisfactory. The daily average matched volume during the first week of PCR operations in NWE and SWE amounted to cleared volumes of 3.5 TWh, with an average daily value of over €200m. The delivery date 11 February saw some strong price convergence: the NWE region witnessed one hour with only two price areas. Price for all the NWE countries, except GB, was €29.45/MWh.

Plans are already well advanced for the next phases of development of market coupling using the PCR solution within other European regions.

The prices in NWE and SWE regions are now calculated in a common synchronised mode by PCR, but transmission capacity between France and Spain is still only offered via explicit auctions. The target is that this capacity will be offered via implicit allocation in PCR by May 2014, once the necessary arrangements have been put in place. The NWE and SWE regions will then be fully integrated.

The CWE region is intending to implement flow-based capacity calculation after summer 2014. The PCR solution will play a key role in enabling this.

In the CSE region the work is progressing for Italy to adopt the PCR solution by the end of 2014. The countries bordering Italy shall also be ready for the pan-European power market. Preparation of market coupling based on the PCR solution for the northern Swiss borders is as well ongoing.

In addition, within the CEE region, the “4M MC” project is underway to implement the PCR solution covering Czech Republic, Slovakia, Hungary and Romania. This will replace the existing trilateral solution in the region and facilitate future integration of CEE with NWE/SWE.

The PCR Power Exchanges are also looking at how to best facilitate market input on the operation and future development of PCR, given that individual Power Exchanges are now creating a European-wide solution. The PCR parties intend to analyse further the possible ways to combine views from stakeholders across the different markets.

North-West Europe (NWE) includes: Belgium, Denmark, Estonia, Finland, France, Germany/Austria, Great Britain, Latvia, Lithuania, Luxembourg, the Netherlands, Norway, Poland (via the SwePol Link), and Sweden.
South-West Europe (SWE) includes: France, Portugal and Spain.
Central South Europe (CSE) includes: France, Germany/Austria, Greece, Italy and Slovenia.
Central Eastern Europe (CEE) includes: Czech Republic, Germany/Austria, Hungary, Slovakia, Poland and Slovenia.

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