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Regulated monopolies
\n\u2022 One or more vertically integrated companies are responsible for generation, transmission, distribution and supply of electricity.<\/p>\n
Competitive markets
\n\u2022 Energy industry is vertically unbundled:
\n\u2013 Transmission and distribution of electric power are regulated natural monopolies.
\n\u2013 Generators and suppliers operate in a liberalised market environment.
\n\u2013 Generators compete in the wholesale electricity market to sell electricity to large industrial consumers and suppliers, while suppliers compete in the retail electricity market to sell electricity to the final consumers.<\/p>\n
Unlimited access of all the parties to the electric power network is ensured in the principle of access of the third parties to the network – Third Party Access (TPA).<\/p>\n
<\/p>\n
<\/p>\n
Basic goals for composing energy markets are:
\n\u2022 introduction of competitiveness \u2013 to increase effectiveness of energy enterprises\u2019 operation, and as an effect minimisation of final customers\u2019 prices,
\n\u2022 ensuring proper incomes for energy enterprises needed for maintenance and development of technical and organizational infrastructure,
\n\u2022 ensuring country\u2019s energy security.<\/p>\n
Energy-only markets
\n\u2022 Generators are remunerated only for electric energy generated and sold to the market (expressed in \u20ac\/MWh during a specific period)
\n\u2022 Intermittent Renewable Energy Sources affects the energy market \u2013 prices for generating electricity may not be high enough in time of peak demand to recover fixed costs of existing power plants, what is potentially endangering future security of supply (\u201emissing money problem\u201d)
\nCapacity markets
\n\u2022 Generators are remunerated also for the generation capacity they have available in the market<\/p>\n
Generating companies are not dependent on peak price levels \u2013 thay receive an additional revenue stream, valuing the installed capacity of a generation unit, in addition to the existing one for energy.<\/p>\n
Illustration of the physical transfer of power (bottom part) and the financial transfer (upper part), where power is purchased and sold.<\/p>\n
<\/p>\n
\u2022 Electricity traded in a dedicated power exchange or multilateral trading platform
\n\u2022 Market participants submit generation and demand bids.
\n\u2022 The market is cleared once per predefined time period and a single market price is determined.<\/p>\n
\u2022 Power traded in bilateral over-the-counter (OTC) transactions
\n\u2022 Market participants (generators and consumers) agree on a trade contract by directly interacting with each other.
\n\u2022 OTC trading can take the market price published by the power exchange as reference price.<\/p>\n
\u2022 Organized over-the-counter (OTC) trading
\n\u2022 Market participants submit generation and demand bids to a market platform which is cleared continuously.
\n\u2022 One market player can bilaterally accept the bid of another market player, resulting in different prices for each trade.<\/p>\n
<\/p>\n
\u2022 Electricity traded from years before up to the day before delivery
\n\u2022 Contracts to deliver\/ consume a certain amount of electricity at a certain time in the future for a agreed price
\n\u2022 Futures are standardized contracts that can be further traded on power exchanges
\n\u2022 Forwards are mainly bilateral OTC, not standarised contracts \u2013 they give more flexibility to the involved parties, but cannot be further traded<\/p>\n
\u2022 Electricity traded one day before actual delivery
\n\u2022 At the end of the day-ahead the market zone has to be in balance (balance of scheduled generation, forecasted demand , import and export to other market zones)
\n\u2022 Traded with day-ahead bilaterall OTC contracts or on the day-ahead power exchange
\nMain parts of electricity market (EOM)<\/p>\n
\u2022 Electricity traded on actual delivery day
\n\u2022 Market participants are able to adjust to better wind forecasts, unexpected power plant outages, etc.
\n\u2022 At the end of the intra-day market zone may not be in balance \u2013 balance responsible prty will deal with in the balancing market.<\/p>\n
\u2022 The TSO have to maintain the system balance by activating aviable reserves or demand side management<\/p>\n
\u2022 Reserve market is not energy-only market \u2013 both energy and capacity services can be contracted.
\n\u2022 Main types of reserves are:
\n\u2013 Frequency containment reserves (previously \u201cprimary reserves\u201d) \u2013 used to stabilize the frequency within the time-frame of seconds are controlled automatically and activated locally.
\n\u2013 Frequency restoration reserves (previously \u201csecondary reserves\u201d) \u2013 used to restore the system balance within the time-frame of seconds up to 15 minutes and are controlled automatically and activated centrally.
\n\u2013 Replacement reserves (previously \u201ctertiary reserves\u201d) \u2013 used to restore the system balance when frequency restoration reserves are not aviable and to allow the FRR units to return to their pre-imbalance status, activated within the time-frame of minutes to hours, controlled manually and activated locally.<\/p>\n
\u2022 Imbalance settlement takes place after the phisical delivery.
\n\u2022 BRP buys upward or downward regulation and pays the reserve provider for extra generation or load shedding.<\/p>\n
Capacity mechanisms are administrative measures to ensure the achievement of the desired level of security of supply by remunerating generators for the availability of resources. They are needed to maintain resource adequacy \u2013 the ability of the electricity system to offer sufficient generation and flexibility to ensure reliable electricity supply at all times.<\/p>\n
<\/p>\n
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