Abstract
In winter 2009-2010, prices peaked on three days. The high prices that were experienced in the majority of the Nord Pool Spot price areas initiated a study on the reasons that led to the price spikes and on the possible measures to develop the Nordic market arrangements to avoid such situations in the future. The analysis of the winter 2009-2010 events revealed that there were a number of primary causes for the occurrence of the price peaks and no single individual cause could be pinpointed to bear the key responsibility. The fact that the weather was cold all over the Nordic area in conjunction with the low availability for the Swedish nuclear generation capacity, however, could be indicated as the key underlying causes. The analysis also showed that the way the Nordic transmission capacity is allocated can be listed as an additional factor complementing to the occurrence of the price peaks. Thus, NordREG concluded that a review of the methods of calculating and allocating transmission capacity for the market should be carried out. As a part of this, an analysis that addresses the delimitation of bidding areas and maintenance planning of the transmission network infrastructure should be prepared as well.
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Citation Formats
None.
NordREG report on the price peaks in the Nordic wholesale market during winter 2009-2010. Final report.
Denmark: N. p.,
2011.
Web.
None.
NordREG report on the price peaks in the Nordic wholesale market during winter 2009-2010. Final report.
Denmark.
None.
2011.
"NordREG report on the price peaks in the Nordic wholesale market during winter 2009-2010. Final report."
Denmark.
@misc{etde_1011558,
title = {NordREG report on the price peaks in the Nordic wholesale market during winter 2009-2010. Final report}
author = {None}
abstractNote = {In winter 2009-2010, prices peaked on three days. The high prices that were experienced in the majority of the Nord Pool Spot price areas initiated a study on the reasons that led to the price spikes and on the possible measures to develop the Nordic market arrangements to avoid such situations in the future. The analysis of the winter 2009-2010 events revealed that there were a number of primary causes for the occurrence of the price peaks and no single individual cause could be pinpointed to bear the key responsibility. The fact that the weather was cold all over the Nordic area in conjunction with the low availability for the Swedish nuclear generation capacity, however, could be indicated as the key underlying causes. The analysis also showed that the way the Nordic transmission capacity is allocated can be listed as an additional factor complementing to the occurrence of the price peaks. Thus, NordREG concluded that a review of the methods of calculating and allocating transmission capacity for the market should be carried out. As a part of this, an analysis that addresses the delimitation of bidding areas and maintenance planning of the transmission network infrastructure should be prepared as well. The flexibility on the demand side has not been very large in the Nordic region. However, the background study prepared by Gaia Consulting showed that even small degree of increased price elasticity could substantially cut the price peaks. This could be seen as an improvement potential of the trading system reflecting the present inability of the market participants to react on the price signals the market place provides. Therefore, NordREG sees that facilitating the appearance of a real price elastic behaviour of the users of electricity can be regarded as one of the key fixes for the problem. Furthermore, NordREG proposes that a consultancy study on how to promote demand flexibility in the Nordic market in a coherent way should be prepared. A further area for improvements is transparency. Based on the consultancy study and the feedback from some stakeholders, NordREG finds that it should be assessed whether the area bidding curves at Nord Pool Spot could be publicized to enhance the transparency of the market and to enable all the market participants to have access to the trading data. Transparency in the Nord Pool Spot bid data would enhance confidence in market developments. NordREG also proposes that the trading mechanisms at the Nord Pool Spot should be assessed. This assessment should especially focus on how to increase flexibility into the market, how to improve pricing and offering of peak load reserves to the Nord Pool Spot and how to improve possibilities to hedge area price risks. NordREG emphasizes that the development of the Nord Pool Spot trading mechanism and its transparency should be prepared together with the Nord Pool Spot. Finally, one of the key issues for ensuring a well-functioning electricity wholesale market is the optimal and sufficient transmission network with its cross-border interconnectors that support the wholesale electricity market. Traditionally the Nordic TSOs used to cooperate in the area of grid planning and produced Nordic Grid Master Plans. The Nordic Council of Energy Ministers has underlined the importance of continued Nordic grid planning. The 3rd Legislative Package raised the cooperation of TSOs on grid planning to the European level and as a task for the European TSO organisation ENTSO-E, which has organised regional groupings of TSOs to work on grid planning. ENTSO-E published the pilot Ten Year Network Development Plan in June 2010 and the process for preparing the next one is already underway. This planning work and the results of it that will materialise themselves through transmission network investments will have a significant impact on the functioning of the Nordic, Northern and the whole European electricity wholesale market and its integration. This work needs to be analyzed and followed by NordREG. (LN)}
place = {Denmark}
year = {2011}
month = {Jan}
}
title = {NordREG report on the price peaks in the Nordic wholesale market during winter 2009-2010. Final report}
author = {None}
abstractNote = {In winter 2009-2010, prices peaked on three days. The high prices that were experienced in the majority of the Nord Pool Spot price areas initiated a study on the reasons that led to the price spikes and on the possible measures to develop the Nordic market arrangements to avoid such situations in the future. The analysis of the winter 2009-2010 events revealed that there were a number of primary causes for the occurrence of the price peaks and no single individual cause could be pinpointed to bear the key responsibility. The fact that the weather was cold all over the Nordic area in conjunction with the low availability for the Swedish nuclear generation capacity, however, could be indicated as the key underlying causes. The analysis also showed that the way the Nordic transmission capacity is allocated can be listed as an additional factor complementing to the occurrence of the price peaks. Thus, NordREG concluded that a review of the methods of calculating and allocating transmission capacity for the market should be carried out. As a part of this, an analysis that addresses the delimitation of bidding areas and maintenance planning of the transmission network infrastructure should be prepared as well. The flexibility on the demand side has not been very large in the Nordic region. However, the background study prepared by Gaia Consulting showed that even small degree of increased price elasticity could substantially cut the price peaks. This could be seen as an improvement potential of the trading system reflecting the present inability of the market participants to react on the price signals the market place provides. Therefore, NordREG sees that facilitating the appearance of a real price elastic behaviour of the users of electricity can be regarded as one of the key fixes for the problem. Furthermore, NordREG proposes that a consultancy study on how to promote demand flexibility in the Nordic market in a coherent way should be prepared. A further area for improvements is transparency. Based on the consultancy study and the feedback from some stakeholders, NordREG finds that it should be assessed whether the area bidding curves at Nord Pool Spot could be publicized to enhance the transparency of the market and to enable all the market participants to have access to the trading data. Transparency in the Nord Pool Spot bid data would enhance confidence in market developments. NordREG also proposes that the trading mechanisms at the Nord Pool Spot should be assessed. This assessment should especially focus on how to increase flexibility into the market, how to improve pricing and offering of peak load reserves to the Nord Pool Spot and how to improve possibilities to hedge area price risks. NordREG emphasizes that the development of the Nord Pool Spot trading mechanism and its transparency should be prepared together with the Nord Pool Spot. Finally, one of the key issues for ensuring a well-functioning electricity wholesale market is the optimal and sufficient transmission network with its cross-border interconnectors that support the wholesale electricity market. Traditionally the Nordic TSOs used to cooperate in the area of grid planning and produced Nordic Grid Master Plans. The Nordic Council of Energy Ministers has underlined the importance of continued Nordic grid planning. The 3rd Legislative Package raised the cooperation of TSOs on grid planning to the European level and as a task for the European TSO organisation ENTSO-E, which has organised regional groupings of TSOs to work on grid planning. ENTSO-E published the pilot Ten Year Network Development Plan in June 2010 and the process for preparing the next one is already underway. This planning work and the results of it that will materialise themselves through transmission network investments will have a significant impact on the functioning of the Nordic, Northern and the whole European electricity wholesale market and its integration. This work needs to be analyzed and followed by NordREG. (LN)}
place = {Denmark}
year = {2011}
month = {Jan}
}