Intraday Trading

March 2011

• RAs raised a Modification (18_10) in March 2010, proposing the implementation of “intra-day trading” in the SEM.

• The Modifications Committee established a Working Group, which has met on seven occasions, in addition to a number of conference calls.• Widespread involvement from across the industry• Agreement of working assumptions on all major design

components

• The key output is the High Level Design Summary, which has been presented to and unanimously recommended for further development by the Modifications Committee and has been provided to the SEM Committee.

Process

• No major change to the market design

• The design process has been aware of wider considerations (including Day Ahead Market/Market Coupling, Scheduling and Dispatch, Review of CPM and Facilitation of Renewables).

• The SEM will continue to evolve.

• The process has sought to preserve flexibility in the design to accommodate future possible market changes.

Assumptions

Proposed SEM Intra-Day Trading Design:Three Gate Windows / Trading Windows

Start Overlap Opt’n Period

Trading Day - 1 Trading Day

Gate Window Closure(GWC)

EA1

Gate Window Opening(GWO)e.g. as per current

GWC

EA2

GWO

GWC

WD1

GWO

GATE WINDOW10:00 TD-29 to 09:30 TD-1

GATE WINDOW09:30 TD-1 to 11:30 TD-1

GATE WINDOW11:30 TD-1 to 08:00 TD

EA1 Trading Window

EA2 Trading Window

WD1 Trading Window

Ending OverlapOpt’n Period

Ending OverlapOpt’n Period

Ending OverlapOpt’n Period

EA1 Interconnector Unit trades fixed

EA1 and EA2 Interconnector Unit trades fixed

OPTIMISATION TIME HORIZON

• Enhanced trading opportunities, recognising the value of explicit capacity auctions:

SEM Intra-Day Trading Design:Trading and Settlement

• Unused Interconnector capacity from EA1 Trading Window can be utilised in subsequent Trading Windows.

• Superposition will allow the physical capacity of Interconnectors to be observed, whilst enabling trading in excess of the capacity in each direction (import, export). This provides opportunities to arbitrage and deliver price efficiencies.

• Settlement will continue to be Ex-Post, based on Dispatch and Generator Unit performance against Dispatch. No changes are proposed to settlement payments or charges.

SEM Intra-Day Trading Design:Impacts

• SEM Intra-Day Trading will deliver compliance and regulatory intent:• Implementation in line with SEM Committee Decision on Intra-Day Trading• Compliance with EU Congestion Management Guidelines

• Opportunity for greater utilisation of infrastructure (Moyle and EWIC), closer to real time.

• Greater competition through increased trading opportunities (including superposition), with reduced trading risks (more opportunities to alter trading positions).

• Greater Generator Unit cost-reflective bidding (bringing market timelines closer to fuel purchase timelines).

• Agreed Credit Cover mechanisms, consistent with the original market principles, will be put in place.

TSO System Security Issues (1):Proposal

• TSOs requested that generator notice times be included in the market scheduler to allow for the production of a manageable Interconnector schedule• Highlighted concerns over shorter timeframes for operation• Participants requested modelling of impacts of notice times on SMP and constraints

before agreeing to allow them to be included• TSOs confirmed intra-day can progress without inclusion of notice times in the market

schedule• Requirement has been removed from the Intra-Day High Level Design

• TSOs propose that a test environment be developed to include notice times• Test environment should be included in market design• Not activated at intra-day go-live• Study the effects of including notice times• Cost is minimal but the value is very high