1. Cross Border Intraday BE-NL
Interim Solution
Brussels, 26 July 2010
A. Vreeman (APX-Endex)
T. Kramer (Belpex)

2. Agenda Elbas introduction Interim solution Technical implementation
Trading
Block bids
Transmission capacity
Settlement
Enduring solution
Compatibility
Parallel approach

3. Elbas today The only cross border intraday market in Europe
Continuous 24/7 trading
Individual hours
Blocks bids
A tool to adjust trades made in the day-ahead market before hour of delivery
Fast developing liquidity:
1.8 TWh in 2008
2.3 TWh in 2009
Real-time
Reliable
Proven

4. The Elbas model as-is Developed during the nineties
Customer need for adjustment of day-ahead schedules before hour of delivery
Risk and uncertainty due to expensive and unpredictable balancing market
Need for a more efficient use of the remaining cross border capacity after day-ahead trading
Potential for a better use of production flexibility across borders
Further development / extension foreseen:
Negative prices
Smaller volume tick size i.e. 0.1MW instead of 1MW (under discussion)
Further volume and liquidity increase (30 % increase the last year)
Further geographical growth (Benelux, the Baltic)
Increased cable capacity between the Nordic countries and the continent

5. Elbas ad-interim
Implicit cross border trading makes better use of grid capacity: Immediate improvement of current situation NL-BE
Potential to link NL-BE to NO and GE:
Access to counterparts with different product mix
Access to counterparts with different weather conditions
Access to counterparts with different marginal costs
Increases the potential for flexible producers (i.e. hydro)
Reduces the risk of the balancing market
Reduces the risk of prices below marginal cost
Learning experience to help develop enduring Target Solution

6. Interim solution Relatively modest cost/effort:
Elbas as-is (only development of interfaces and supporting software)
Use of existing systems and infrastructure, proven technology
Relatively minor TSO efforts required
No interference with other interim solutions (e.g. FR-DE-AU)
Important improvement of today’s allocation mechanism
Continuous implicit allocation, coupling of existing ID markets
Together with other regional solutions: comprehensive solution, even if links between platforms rely on trader arbitrage
Initial Scope: NL-BE
Potential: NL-DE and NL-NO targeted, other extensions can be investigated
Facilitates development of an enduring solution
Refinement of target requirements, based on learning experience
Governance framework can be re-used for enduring solution, although not a necessity
Strong commitment of APX-Endex, Belpex and Nord Pool to support establishing the enduring Target Solution, in part given by shared views and secured by similarities in shareholder structures

7. Interim solution step 1: NL-BE
Elia + TenneT operators:
Real-time capacity monitoring
Re-use of pro-rata allocation platform
Elbas system:
Hosted by NPS
Separated from NPS Elbas market (as no capacity is made available yet), but the same instance is used = opportunity
Well-known, appreciated, implemented and deployed, reliable and proven (uptime 99.98%)
Local operations by APX/Belpex:
Existing membership arrangements are retained
Existing risk management, reporting and settlement systems are retained
Well-known, appreciated, implemented and deployed, reliable and proven
Capacity Matrix
Matching Algorithm
Shared Order Book
APX/NL market
BPX/BE market
Clearing/
Notification
Systems (APX)
Clearing/
Notification
Systems (APX on behalf of BPX)

8. Interim solution step 2: NO-GE-NL-BE
Open Capacity Matrix:
GE-NL, GE-DK
TSO operator(s)
TSO operator(s)
Capacity Matrix Master (Slave GE-NL, GE-DK)
Matching Algorithm
Other interim
solutions (FR-DE?)
Direct Access
Shared Order Book
APX: NL market
BPX: BE market
NPS: Nordic, GE market
Clearing/
Notification
Systems (APX)
Clearing/
Notification
Systems (APX on behalf of BPX)
Clearing/
Notification
Systems (NPS)

9. Trading
Elbas supports continuous trading, where XB trading is possible if and insofar TSOs provide XB transmission capacity: what you see is what you get
If bottlenecks from BE to NL, then participants in NL will not see the sales bids from traders in BE
If there are no bottlenecks, all participants view all bids in the market: there is ONE MARKET

10. Continuous trading A bid/offer consists of:
The product i.e. the instrument to be traded
The volume
The price
Minimum volume of a bid/offer is 1 MWh
Minimum price tick-size is 10 €cents
Priority order of bids/offers:
Price i.e. incoming bid/offer receives the best available price(s)
Timestamp i.e. arrival of the bid/offer to the register
Any bid/offer is binding until:
A trade happens, the bid/offer is changed inactivated or cancelled
Expiry of the instrument to be traded
A bid/offer can be changed or cancelled until it is filled i.e. it finds a counterparty in the market

11. Block bids Execution constraint: “all-or-none”
Matching of a block bid and offer requires fulfillment of:
The length of the block
The price
The volume
Traders are free to define the block’s start and stop hours
The volume (MW) is the same for each hour
The price (€) is the same for each hour
Average Price Calculator tool can be used when placing block bids
A block bid/offer can consist of all hours open for trading, hence a block can at the maximum be up to 32 hours

12. Transmission capacity
TSOs provide confirmed capacity (ATC) to Elbas
File transfer or manual input
TSOs may at any point in time change capacities input to Elbas, if so required due to grid circumstances
TSOs have direct access to Elbas for this purpose, real-time
Elbas trading is firm
Change of capacity does not cancel Elbas trades that have already been concluded

13. Trading scheme 12-gate nomination scheme Trading scheme:
Nomination gate closure every 2 hours
Trading scheme:
XB trading (competition between BE and NL orders) will be possible:
Until 1:30 before real time for “even hours”
Until 2:30 before real time for “uneven hours”
Belpex/BE trading closes 5minutes before real time
APX/NL trading closes 90 minutes before real time
Continuous trading, no hindrance from “underlying” gate system

14. 12-gate nomination scheme

15. Transparency
Transmission capacities and market data (anonymous) can be accessed via the web
In addition to customer reports (own orders and trades), traders can access detailed anonymous market information via Elbas, such as:
Price information and market depth
Transmission capacities
Trade ticker
All in real-time
Furthermore, APX-ENDEX / Belpex systems archive all individual trade data, which can be accessed by participant via existing facilities and protocols

16. Elbas price information window

17. Elbas market depth
In the Order Depth -window participants can observe bids and offers in the selected Elbas-area by Instrument
Bid = buy bid
Ask = sell offer
Bqty = volume of the bid
Aqty = volume of the offer

19. Cross-PX settlement link
Local markets are settled as per existing clearing and settlement arrangements
Daily settlement
APXSHIP buys power in exporting Hub, and sells power at the same price in the importing Hub
Single clearing house (APX-Endex)
Daily settlement as per standard timings
Physical fulfillment as per standard balancing arrangements
APXSHIP becomes balance responsible for this specific purpose i.e. full segregation from normal business
APXSHIP delivers power to the importing PX-BRP (either APX-Endex Clearing in NL, or Belpex in BE)

20. Physical fulfillment
This example illustrates the scenario where there is a flow from BE to NL

21. Physical fulfillment
This example illustrates the scenario where there is a flow from NL to BE

22. Enduring Solution

23. Target solution
Requirements for NWE enduring IDXB solution are currently elaborated, based on the AHAG target solution and the CWE orientation study
Exchanges see 2 basic approaches
Centralized or decentralized
Detailed assessment to be done once enduring requirements become clear
Interim solution does not hinder further development of the target model
Technical: to be assessed, but developments will likely be needed
Governance: enduring can build on interim
XB shipping: easily extendible
Scope: interim solution could cover substantial part of NWE region
Strong commitment of APX, Belpex and Nord Pool to work with TSOs and other Exchanges to establish the enduring CWE-Nordic solution

24. Target solution compatibility
ELBAS as a market model
Excellent basis for the target model, as most of its features are at the root of the target model (e.g. continuous trading and implicit capacity allocation, real-time direct TSO control)
Nevertheless, some changes could be performed in order to further improve the market model, such as:
Market-based allocation in case of increase (decrease?) of capacity
Enhanced treatment of block orders (automatic cross-matching of block and hourly products)
Introduction of more sophisticated orders to replace OTC needs
ELBAS as an IT System
Excellent basis for the target model, as it exists, builds over 10 years of experience in XBID, accepted (and asked for) by the market
Will necessitate technical changes/improvements in order to fully cope with the target market model design, once established

25. Target solution (centralized)
operator(s)
TSO operator(s)
TSO operator(s)
Capacity Matrix
Optional: could be replaced by TSOs managing capacities directly in platform
FCFS not a market-based mechanism
Efficiency / response times?
Non-discriminatory and equal access to be secured
Capacity Matrix
Platform operator(s)
Matching Algorithm
Shared Order Book 1
APX: NL market
BPX: BE market
NPS: Nordic, GE market
Other market operator/OTC
Other market operator/OTC
Clearing/
Notification
Systems (APX)
Clearing/
Notification
Systems (APX on behalf of BPX)
Clearing/
Notification
Systems (NPS)

26. Target solution (decentralized)
Regional Capacity Matrix
Regional Capacity Matrix
Regional Capacity Matrix
TSO
operator(s)
Capacity Matrix Slave
Capacity Matrix Slave
Cross matching of orders
Platform
operator(s)
Matching Algorithm
Matching Algorithm
Shared Order Book 1
Shared Order Book 2
APX: NL market
BPX: BE market
NPS: Nordic, GE market
Other market operator
Other market operator
Challenges:
Liquidity split
Complex implementation (cost) efficient?
Cross matching of orders: consequences, free riding issues?
Clearing/
Notification
Systems (APX)
Clearing/
Notification
Systems (APX on behalf of BPX)
Clearing/
Notification
Systems (NPS)

27. Parallel path approach
Interim path:
Efficient solutions across large regions that can be achieved quickly and with minimal development effort, while bringing already significant improvements
Enduring path:
Clear/tangible engagement to (help) design and implement the CWE or European target model