GRI NW InvestmentCross border investment

Dublin 19 May

Bid Capture Process

Adam Cooper & Mike Young

Purpose of this session

• Reminder of the project drivers

• Examine how shippers interact in the process– Bidder sheet structure– Bid mechanism– Interaction with other modules

Project drivers

• Reiterate project outline

• EFET position– Need for capacity– Market based solutions– Proper risk allocation between “developer”

and rest of community– Efficient investment to meet gas demand and

flexibility to enhance gas on gas competition

Bid Sheet (1)

• Structure is quite simple• Based on shippers having an implied supply

curve – the price schedule for a range of capacity levels derived from the economic test model

• Also an understanding of the economic test for triggering an investment – and remember this is only year one of a rolling annual process!

• Two rounds where a volume of capacity is bid for various periods

Bid Sheet (2)

• Aggregate bids made available between rounds, including an indicative clearing price

• Indicative clearing price is based on the price where capacity offered is greater or equal than that bid for

• Aggregate bids and revenues are exported to the economic test

• Shippers wait for investment and allocation decision following TSO assessment and confirmation of the investment signal

Screen Shots

• What a shipper sees in Round 1

• Aggregate view of bids

• Round 2 rules

• Aggregate bids and revenues

Shipper Input Sheet(3 Routes over n years, 2 Rounds, 8+ Shipper)

Belgium-France

 Round 1                        

Shipper A    

Exit Netherlands Entry Belgium Exit Belgium Entry France          

                           

 Capacity

Price level   Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9

Year 10

                           

Baseline 10 P1   4 4 4 4 4 4 4 4 2 2

  12 P2   4 4 4 4 4 4 4 4 2 2

  14 P3   4 4 4 4 4 4 4 4 2 2

  16 P4   4 4 4 4 4 4 4 4 2 2

  18 P5   4 4 4 4 4 4 4 4 2 2

  20 P6   4 4 4 4 4 4 4 4 2 2

                           

Bidding Aggregation SheetBringing all bidding sheets together to compare with the Economic Test

Belgium to FranceRound 1

Exit Netherlands Entry Belgium Exit Belgium Entry France

Capacity Price level Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11

Baseline 10 P1 21 19 17 19 16 16 13 13 9 9 012 P2 21 19 17 19 16 16 13 13 9 9 014 P3 21 19 17 19 16 16 13 13 9 9 016 P4 20 18 16 18 15 15 12 12 8 8 018 P5 19 17 15 17 14 14 11 11 7 7 020 P6 19 17 14 16 13 13 10 10 6 6 0

CP

How to proceed

• Get final economic test parameters and tariff schedule

• Decide on whether to run an illustrative or interactive bid test

Illustrative Approach

• An illustrative test provides a step through of the entire process– this is less resource intensive as there is no

system requirement– this could still use a number of shippers to

determine a range of typical bidding profiles

Interactive Approach

• Closer to “Reality”

• An interactive bid test involves some type of system build

• Written scenarios may be needed to give reasons to bid

• Needs at least 8 shippers to agree to participate and help develop the system

• June start needed

Conclusions

• Views and / or Questions