Plenary Lecture

Nodal Electricity Market Design Based on Regulated Access to Transmission Network

Dr. Jean Constantinescu
E-mail: jeanconstantinescu@ymail.com

Abstract: The EU legislation of the Third Energy Liberalisation Package, and its subsidiary market and network regulation, aim at a single integrated European electricity market by 2014, with operators’ responsibilities, security principles and methods all harmonized. The target model that was outlined by the draft ACER guidelines is either coupling of the day-ahead market or the auction platform for long-term deals. Accomodation of multiple power system constraints with the market mechanism was encountered as a major challenge along the way toward implementation of different electricity market designs. This lecture is meant to show that the nodal model of access to the network in conjunction with the market coupling approach would yield significant benefits. The proposed nodal market design is essentially based on bids for local energy and a regulated transmission access. It supports predictability of network capacity at the point of user connection, a desirable feature for Smart Grids, discovers the real market clearing price, and mitigates power system operational risk.
The proposed nodal, or „Point – of – connection” transmission capacity makes a natural model for implicit allocation of grid capacity. Implicit allocation of nodal capacity is ensured within the energy auctions themselves. By contrary, allocation of „point – to – point” transmission capacity „rights” to market players in explicit auctions does not incentivize the TSOs to allow greater transmission system utilization being inconsitent with the monopolistic nature of transmission service. Market fragmentation and network inefficiency can be introduced when electricity and transmission capacity are auctionned separately. A nodal market design based on regulated access to power transmission network and clear separation between „commercial” congestion management and TSO’s operations would lead to significant benefits. Transactions would migrate to centralized markets thus increasing market integration and liquidity since electricity is sold all at once with release of network capacity. The market players can more easily optimize their market portfolio on the base of meningful and predictable transmission capacity. The TSOs would receive adequate resources to increase network capacity. There will be enhanced market integration of intermittent RESs that are critically dependent on short notice access to the regional markets.

Brief Biography of the Speaker: Jean Constantinescu graduated in 1968 and received the doctoral degree in 1980 in power systems from the Polytechnic University, Bucharest. He is a power system and market specialist with ROENP and a CIGRE – C2 committee member. During the period 2005 – 2010 he was the president of the Romanian Energy Institute Association – IRE, the Romanian representative to EURELECTRIC, and the editor of “Energetica” magazine. That time he also provided technical assistance for energy regulators and TSOs of Romania, Moldavia, Macedonia and Albania, and for the association of energy regulators in South - East Europe. He was the first president of the Romanian energy regulator – ANRE, the first CEO of the national power grid company – Transelectrica, director general of the Energy Research and Modernizing Institute – ICEMENERG, chairman of the Energy Commission by the Ministry of Research and Technology (1993 – 2000) and member of UCTE and EURELECTRIC boards (1999 - 2005). He was also head of the power system departments with ICEMENERG and the national power control unit. His research interests focus on consistent harmonization of electricity market design with the functionality of the physical Power System. He is author of about 120 academic articles and general papers (a selected list is available at: http://j-constantinescu.org/__Papers.html).