In the last decade and in the context of the wider progress in the energy sector, the European Commission has promoted vigorously the liberalization amongst member states and the creation of a competitive single electricity market. Enhancement of competition within European electricity markets is a prerequisite towards creating the single internal energy market.
The key priorities are to increase generation efficiency, to promote the transfer and diffusion of lower energy cost across member states through the enhancement of transmission capacity, thereby improving the competitiveness of the European economy, to increase security of supply and to maximize RES penetration with view to protecting the environment.
In order to integrate the underlying European markets, the Agency for the Cooperation of Energy Regulators (ACER) has proposed a single European market model, also known as the Target Model. The Target Model provides the operation of the Energy Exchange along with the establishment of four new markets, which will replace the Mandatory Pool model of the current wholesale electricity market:
- Wholesale market for Forward electricity products: Participants are allowed to enter into electricity purchase and sale contracts with or without having the obligation of physical delivery, as defined in the relevant market code, which will be realized and cleared through the new energy exchange system as financial future products.
- Day Ahead Market: Participants submit electricity “sell/buy” hourly offers with physical delivery obligation in the following day. Within the Day Ahead market the quantities of electric energy committed and traded through forward physical delivery products will also be indicated, either through the Forward market or bilaterally. Also available in the Day Ahead market will be the power capacity across interconnections, which will be allocated implicitly by coupling with connected European markets.
- Intraday Market: Participants will be able to submit physical delivery schedules within the day of delivery, upon expiry of the Day Ahead’s Market deadline, by taking into account the quantities of energy reserved through trading in Forward electricity products and the results of the Day Ahead Market, as well as any constraints resulting from the Balance Market resolution. The Intraday Market will allow Participants to buy/sell electric energy in real time in order to minimize the deviation resulting from their trades in the previous markets.
- Balancing Market: The deviations of electric energy and power between the submitted schedules and actual ones, of generators and consumers that participated in all previous markets, are resolved by the TSO with the use of units that offer specific technical response capabilities.
The operation of the first three markets is assigned to the Greek Energy Exchange (HEnEx), while the Balancing Market is designated to the Greek TSO (ADMIE). HEnEx is the Nominated Electricity Market Operator (NEMO), formed as the successor of the Operator of Electricity Market (LAGIE), carrying the duty to couple the Day Ahead and the Intra-Day electricity markets.
The operation of the new markets described above will allow all costs to be fully reflected in the electricity prices. The Forward market will enable large consumers to enter into long-term agreements with generators, providing a tool for risk management and hedging over their energy costs, which is a common practice currently in the European market.
The RES units will participate in the wholesale market on equal terms amongst other energy generators. As a consequence, the implementation of the Target Model will transfer the balancing responsibility for the system from ADMIE to RES producers. Through the operation of the balancing market a more robust market operational model is introduced that will ensure that the generation or demand response systems available for the true balancing market requirements are compensated at the right price and according to the real-time needs of the System. Therefore, the correct market signal will be provided regarding the real-time balancing cost and, at the same time, the clear incentive to minimize them, the ultimate goal being to maximize the use of RES generation through energy storage systems.
In accordance with the enacted law 4414/2016, newly installed RES projects with a capacity of over 3 MW for wind parks and over 500 kW for PV parks, having been successful in the Regulatory Agency of Energy (RAE) related tenders, are committed to participate in the new competitive wholesale markets undertaking power balancing responsibilities.
This denotes that the RES unit owners shall bear the costs resulting from the divergence between their submitted and their actually generated electric energy. Consequently, RES Aggregators or else well-known as green aggregators, are becoming increasingly important for the management of generation from RES units. Green aggregators are innovative specialized companies that use state-of-the-art tools to minimize imbalance costs while also commercially optimizing the power production from the RES units. By managing a large number of geographically dispersed RES units, they counter the inherent generation uncertainty of each single unit and consequently they manage to increase the accuracy of the energy forecasts and reduce the variability of the total RES portfolio output.