1. NWE Info Session Operational & contractual changes for Dutch wholesale market organization

2. Agenda Introduction Matthijs Nijpels General overview of NWE Price Coupling Thomas Donders Operational principles & possible scenarios Catherine Fricot Detailed operational procedures Matthijs Nijpels New Smart Order types & Automatic Order Submission Tool Rob Loos Changes to Market Rules (APX / TenneT) Rob Loos & Thomas Donders Member Testing & Planning to go-live Rob Loos Conclusion Gineke van Dijk 2

3. NWE DAY-AHEAD PRICE COUPLING General overview

4. AS IS > TO BE 4 NWE Two separate Market Couplings (CWE & Nordic) linked by a volume coupling (ITVC organised by EMCC) Sequential calculation approach No common algorithm applied Full coupling with GB One single price coupling based on a single calculation One single common algorithm to allow for a sound and robust price formation

5. NWE – Driving European Market Integration 5 NWE DA It promotes liquidity and robustness of DA markets It allows for optimal usage of cross-border capacities It encourages the harmonization of market rules It establishes the necessary framework to enable extensions „NWE is more than the sum of its parts“

6. NWE – Behind the scenes 6 13 Transmission System Operators 4 Power Exchanges Approx. 50 systems involved Approx. 150 interfaces 40 serviced interconnectors 30 bidding zones Parties involved Systems & interfaces

7. NWE - Interconnectors IFA BritNed NorNed Kontek Baltic SwePol EstLink FerroSkan Skagerak Kontiscan DK1-DE

8. Price Coupling Process General term for ATC and/or FB parameters used = CZCs : Cross Zonal Capacities 8

9. PCR : Price Coupling of Regions 9

10. Potential integration of losses on DC cables Activation of losses on a specific interconnector is subject to approval of relevant national NRAs 10 CableLoss factor foreseen Comments IFA (UK-FR)yesApplication to Ofgem and CRE. Foreseen for go-live Britned (UK-NL)yesApplication to Ofgem and ACM. Foreseen for go-live NorNed (NO-NL)yesApplication to NVE and ACM. Pending regulatory approval

11. OPERATIONAL PRINCIPLES & POSSIBLE SCENARIOS General principles

12. Price Coupling Process General term for ATC and/or FB parameters used = CZCs : Cross Zonal Capacities 12

13. NWE Business Process 13 CZCs and allocation constraints submission and integration Final confirmation of the results 10:30 CZCs and Allocation constraints submitted to PCR 12:00 Orderbooks closure Global Preliminary PX confirmation 12:55 Global final confirmation Publication Trading confirmation and scheduled exchanges notification 12:55 – 14:00 Nominations PCR process: CZCs and allocation constraints process Orderbook processing PMB calculation Preliminary confirmation process PCR process: CZCs and allocation constraints process Orderbook processing PMB calculation Preliminary confirmation process Price coupling results and scheduled exchanges transfer Final confirmation process

14. PCR Process Timings for NWE Normal process – 55 minutes 14 12:00OBK GCT 12:00 – 12:10 Check of OBK and sending to PMB 12:10 – 12:27Calculation 12:28 – 12:41 Preliminary PX validation 12:42Publication of preliminary results (incl. market clearing price) to the market and in parallel sending of these preliminary results for final confirmation/approval to the TSOs 12:42 – 12:54 Final TSO validation 12:55Publication of Final Results (incl. market clearing price) Start of Notification Process

15. Process is delayed 15 Partial Coupling/Full Decoupling Deadline Target Time Latest Time to Start an IC TIME Normal Procedure Normal procedures can still apply after target time Backup procedure can apply before the target time Backup procedures Fallback procedures can apply before fallback time Fallback procedures Decoupling preparation decoupling

16. Process delayed – assumptions Pre-coupling Deadline to solve incidents with Network Data (CZCs) publication is 11:45 CET Coupling Time allowance for technical problem solving up to 55 min Time allowance for special market procedures such as handling of curtailment situations or price threshold reached via a second auction used by CWE PXs or the NPS-applied regulated routines that include peak load capacity (production/load) reserves activation. Deadline for final Market Results is 13:50 CET Post-coupling Final notification deadline of 15:30 in CWE, CWE-GB and CWE-Nordic interconnectors 16 2 nd Auction CWE/ GB 48 min Max. Time /Flexibility to solve technical problems 55min

17. Second Auction A Second Auction is triggered in case at least one of the CWE/GB prices reach or exceed the predefined price thresholds The routine consists in Reopening the PXs order books for 10 minutes to give the Market Participants the opportunity to modify their bids in order to improve the market situation Execution of a second calculation with the new Order Data The thresholds to trigger a 2nd auction in CWE remain the same: + 500 EUR/MWh and -150 EUR/MWh In GB thresholds will be introduced: + 500 GBP/MWh and -150 GBP/MWh In case the prices still reach the thresholds after the Second Auction calculation, no additional Second Auction will be triggered 17 2 nd Auction CWE/ GB 48 min

18. PCR PROCESS TIMINGS for NWE 18 * This is the maximum time which could be used to solve a technical problem in order to avoid a decoupling. If the technical problem is resolved in less than 55 min than the next processes will start earlier. ** the Second Auction in CWE / GB is a single process taking 48 minutes. *** the Special Procedure for the Nordics is an iterative process which will run the number of times necessary taking into the 13.50 full decoupling deadline when NWE is coupled.

19. Fallback procedures 19 Partial Coupling/Full Decoupling Deadline Target Time Latest Time to Start an IC TIME Normal Procedure Normal procedures can still apply after target time Backup procedure can apply before the target time Backup procedures Fallback procedures can apply before fallback time Fallback procedures Decoupling preparation decoupling

20. Fallback procedures 20 Partial Coupling/Full Decoupling Deadline Target Time Latest Time to Start an IC TIME Normal Procedure Normal procedures can still apply after target time Backup procedure can apply before the target time Backup procedures Fallback procedures can apply before fallback time Fallback procedures Decoupling preparation decoupling

21. Full Decoupling of NWE (1) Internally in CWE and for the CWE – Nordic interconnectors (except Baltic Cable): Shadow auctions organized by CASC will be held and results published The 3 PXs within CWE will reopen the order books (20 min) and perform local DA spot market calculations without using cross border capacities The notification deadline of 15.30 is applicable for the notification by market parties of utilization of Explicit Capacity bought in Shadow Auctions Fallback for Baltic cable : capacity goes back to the cable owner In GB Shadow auctions organized by RTE/NGIC are applicable for FR/GB border only (IFA interconnector), this consists of daily explicit auctions Capacity of virtual interconnector set to zero The 2 PXs will reopen the order books (APX UK 15 min) and perform local DA spot market calculations without using cross border capacities Fallback for BritNed : capacity goes to intraday For the Nordic – Baltic area including the link with Poland Shadow auctions on 3 CWE-Nordic links Re-opening of NPS order books Price coupling will be performed by NPS utilizing the cross border capacities within this region 21

22. Shadow Auctions Bids submitted through the Shadow Auctions interface at CASC.EU are default bids : They are valid for every day of the year, for a specific border, direction and an hourly period (Volume in MW and a Price in €/MWh) Participants can update their default bids at any time before the freezing of the database when Shadow Auctions are run Description in “Harmonised Auction Rules for CWE, CSE and CH” Possibility to register only for Shadow Auctions, with a ‘lighter’ status: “Participant to Shadow Auctions Only" Market Participants need to submit a nomination towards the respective TSOs by the notification deadline of 15.30 22

23. Full Decoupling scenario 23 CWE : 4 local PX auctions Nordic-Baltic Market Splitting Virtual Capacity is set to Zero 2 local PX auctions Shadow Auctions “Local” matching process In case of full decoupling the processes are local Communication in case of fallback is organized locally (different info, different timings)

24. CWE TSO investigate flexibility of notification deadline The CWE TSOs and 50 Hertz have agreed upon a joint target solution for the deadlines for submitting the different schedules towards the TSOs available as of Go-Live of the Price Coupling in the NWE region Taken into account that it is important for the TSOs to receive data of good quality, the TSOs agreed to extend the deadline for submitting generation schedules in the very rare cases of specific fallback situations to a later time than 15:30 In these extraordinary situations, all CWE TSOs and 50 Hertz will extend the deadline for submitting generation schedules until at least 15:45. Some TSOs can extend this deadline even beyond 15:45 depending on local market rules This means that market participants have at least 60 minutes for the submission of generation schedules 24

25. CWE TSO investigation on flexibility of notification deadline – impact on procedures 25 Notification Process 45 min 15:30 Crossborder Notification Process 45 min 15:45 Generation Notification Process At least 60 min 15:30 Exceptional cases

26. PCR PROCESS TIMINGS for NWE 26

27. Full decoupling before OBK GCT (12:00) 27 Notification Process 60 min Notification Process 60 min Notification Process 60 min OBK GCT = 12:00 Final Notification deadline =15:30 which applies to: Internal CWE, CWE-GB and CWE-Nordic interconnectors Publication of prelimi- nary results =12:42 * This is the maximum time which could be used to solve a technical problem in order to avoid a decoupling. If the technical problem is resolved in less than 55 min than the next processes will start earlier. ** the Second Auction in CWE / GB is a single process taking 48 minutes. *** the Special Procedure for the Nordics is an iterative process which will run the number of times necessary taking into the 13.50 full decoupling deadline when NWE is coupled. Case X10 Case X12 Case X11 Full decoupling before 12.00 X10 + delay X10 + 2nd Auction CWE Full decoupling 42 min Full decoupling 42 min Full decoupling 42 min Max. Time /Flexibility to solve technical problems 55min* 2 nd Auction CWE/ GB 28 min**

28. Partial (De)coupling within NWE Any scenario where one or more bidding areas and/or interconnectors are temporary not participating in NWE Market Coupling while the remaining bidding areas/interconnectors still participate in NWE Market Coupling The CZCs for the decoupled borders / interconnectors will be allocated via the fall back solution for these temporary not participating borders / interconnectors NWE parties will try to couple as many borders / interconnectors as possible Partial coupling is triggered during the pre-coupling process, at the latest at 11:45 during the coupling process, at the latest at 12:40 28

29. Partial Coupling Scenario Example : CWE+GB <> Nordic 29 PCR coupling Nordic-Baltic: Market Splitting Shadow Auctions “Local” matching process PCR matching process

30. Partial Coupling Scenario Example : NorNed 30 PCR coupling Shadow Auctions PCR matching process

31. Partial Coupling Scenario Example : EPEX OBK missing 31 PCR coupling Shadow Auctions PCR matching process “Local” matching process

32. Partial Coupling Scenario Example: APX NL/Belpex OBK missing 32 PCR coupling Shadow Auctions “Local” matching process

33. 33 PCR coupling Shadow Auctions PCR matching process Partial Coupling Scenario Example : no CWE CZCs in PMB

34. Decoupling scenarios 34

35. * This is the maximum time which could be used to solve a technical problem in order to avoid a decoupling. If the technical problem is resolved in less than 55 min than the next processes will start earlier. ** the Second Auction in CWE / GB is a single process taking 48 minutes. *** the Special Procedure for the Nordics is an iterative process which will run the number of times necessary taking into the 13.50 full decoupling deadline when NWE is coupled. Partial Coupling before OBK GCT (12:00) 35

36. * In case X6b, the NPS special procedure, being an iterative process, may take the same timeframe as when all markets are still coupled, but this is not relevant in a full decoupling since Nordic and Baltic TSOs do not impose a nomination deadline, but instead NPS can take as long time as needed to finish the Price Calculation and subsequent notifications can be submitted (updated) by NPS and market parties to relevant TSOs until about 1 hour before delivery hour. Partial Coupling before OBK GCT (12:00) Partial coupling followed by Full Decoupling + Special Routine Nordics

37. Case X7 Publication of preliminary results =12:42 Case X9a Partial coupling after OBK GCT (12:00) 37 Case X9b Case X8

38. 38

40. DETAILED OPERATIONAL PROCEDURES Timings and messages

41. NORMAL NWE/PCR PROCESS

42. Normal NWE/PCR process 42 10:3012:00 CZC publication MP’s introduce orders 12:55 Coupling process PX GCT Normal timing 14:00 Notifications to TenneT 12:42 Preliminary result publication Final results * All timings are C.E.T

43. Normal process timeline CZC published at 10:30 on CASC website PX gate closure time at 12:00 Publication of preliminary market results 12:42 Publication of final market results 12:55 Notification deadline BelgiumFranceGermanyThe Netherlands Cross-Border14:30 14:00 (E-program) Local/hubHub 1: 14:00 Hub 2: 14:30 Ex post14:3014:00 (E-program) Consumption14:30n/a14:3014:45 (T-program) Generation15:0016:3014:3014:45 (T-program)

44. CASE 1 PROCESS DELAYED WITH MAX TIMING

45. Case 1 Process delayed with max timing 10:3012:0012:55 Coupling process / Backup procedures PX GCT Normal timing 15:00 12:42 Preliminary result publication Exceptional timing 13:3813:50 Technical problem Message to MP MP’s introduce orders CZC publication * All timings are C.E.T 13:00 Final results 45 Notifications to TenneT 13:20

46. Case 1 Process delayed with max timing CZC published at 10:30 on CASC website PX gate closure time at 12:00 Delay in Market Coupling results TimingMessageAdditional actions for MPs Market results Publication deadline Local hub NotificationCross border notification deadline 12:42 [ExC_02]: Delay in Market Coupling Results publication CASC: invitation to update bids in the Shadow Auction system before 13:40 13:5014:00 13:00 TSO: Delay in Market Coupling Results/ local Market Results publication and extension of Hub Notification deadline CASC: invitation to update bids in the Shadow Auction system before 13:40 13:5014:30 13:20 TSO: Delay in Market Coupling Results/ local Market Results publication and extension of Hub Notification deadline CASC: invitation to update bids in the Shadow Auction system before 13:40 13:5015:00

47. Messages PX : [ExC_02] TSO 47

48. CASE 2A SECOND AUCTION

49. Case 2a second auction 10:3012:00 CZC publication MP’s introduce orders Coupling process PX GCT Normal timing Notifications to TenneT Preliminary result publication * All timings are C.E.T Exceptional timing >12:42>12:5515:00 12:30 Message to MP 14:00 13:00<13:50 Final results

50. Case 2a second auction CZC published at 10:30 on CASC website PX gate closure time at 12:00 Threshold reached -€150 or €500 / -£150 or + £500  Second Auction triggered (re-opening of Order Books) Timing*MessageAdditional actions for MPs Market results Publication deadline Local hub Notification Cross border notification deadline ±12:30 [ExC_01]: Thresholds reached - Reopening of the order books PX: OBK open for 10 minutes after message13:50n/a 13:00 TSO: Delay in Market Coupling Results/ local Market Results publication and extension of Hub Notification deadline CASC: invitation to update bids in the Shad ow Auction system before 13:40 13:5015:00

51. Messages CASC will add: Therefore, if relevant, we advise you to update your shadow bids at CASC EXAU platform before 13:40. PX : [ExC_01] 51

52. CASE 4 FULL DECOUPLING

53. Case 4 Full Decoupling 10:3012:00 CZC publication MP’s introduce bids 12:55 13:50 Process run PX GCT Normal timing Exceptional timing 15:3013:05 Full decoupling preparation* Full decoupling Exceptional procedures 13:2012:42 Notifications to TenneT MP’s update orders** Shadow Auction results Note: *Shadow auction will be triggered at CASC ** Reopening of order book for 20 min Final results >14:30 Message to MP 13:00

54. Case 4 Full Decoupling CZC published at 10:30 on CASC website PX gate closure time at 12:00 Full decoupling announcement Shadow auctions Follow the local auction rules Timing*MessageAdditional actions for MPs Market results Publication deadline Local hub Notification Cross border notification deadline 12:42 [ExC_02]: Delay in Market Coupling Results publication 13:5014:00 13:00 TSO: Delay in Market Coupling Results/ local Market Results publication and extension of Hub Notification deadline CASC: invitation to update bids in the Shad ow Auction system before 13:40 13:5014:30 13:20 [ExC_03b]: Risk of Full Decoupling Bids update in the Shadow Auction system n/a15:00 13:50 [ExC_04b]: Full Decoupling – Reopening of the order books OBK open for 20 minutes after message n/a15:30

55. Messages PX : [ExC_02] 55

56. Messages CASC will add: Therefore, if relevant, we advise you to update your shadow bids at CASC EXAU platform before 13:40 PX : [ExC_03b] TSO 56

57. Messages PX : [ExC_04b] TSO 57

58. CASE 5A FULL DECOUPLING + 2ND AUCTION

59. Case 5a Full Decoupling + 2 nd Auction 10:3012:00 CZC publication MP’s introduce bids 12:55 13:50 PX GCT Normal timing Exceptional timing 15:3013:05 Full decoupling preparation* Full decoupling Exceptional procedures 13:2012:42 Notifications to TenneT MP’s update orders** Shadow Auction results Note: *Shadow auction will be triggered at CASC ** Reopening of order book for 20 min *** Reopening of order book “second auction” 10 min **** PX publish at best effort base at 14:45 14:00 MP’s update orders*** 14:2514:45 Final**** results Coupling process Message to MP 13:00

60. Case 5a Full Decoupling + 2 nd Auction CZC published at 10:30 on CASC website PX gate closure time at 12:00 Timing*MessageAdditional actions for MPs Market results Publication deadline Local hub Notification Cross border notification deadline 12:42 [ExC_02]: Delay in Market Coupling Results publication CASC: invitation to update bids in the Shadow Auction system before 13:40 13:5014:00 13:00 TSO: Delay in Market Coupling Results/ local Market Results publication and extension of Hub Notification deadline CASC: invitation to update bids in the Shadow Auction system before 13:40 13:5014:30 13:20 [ExC_03b]: Risk of Full Decoupling CASC: invitation to update bids in the Shadow Auction system before 13:40 13:50 TSO: Delay in Market Coupling Results/ local Market Results publication and extension of Hub Notification deadline 13:5015:00

61. TimingMessageAdditional actions for MPs Market results Publication deadline Local hub Notification Cross border notification deadline 13:50 [ExC_04b]: Full Decoupling – Reopening of the order books PX: OBK open for 20 minutes after message TSO: Extension of Notification Deadlines due to full decoupling declared/delay in local Market Results publication 15:30 14:25 [CWE_UMM_05]: Thresholds reached during local auction PX: OBK open for 10 minutes after message TSO: Extension of Generation Notification Deadlines due to Second Auction Triggered after Full Decoupling 15:30 Case 5a Full Decoupling + 2 nd Auction Full decoupling announcement Shadow auctions Follow the local auction rules

62. Messages PX : [ExC_02] 62

63. CASC will add: Therefore, if relevant, we advise you to update your shadow bids at CASC EXAU platform before 13:40 Messages PX : [ExC_03b] TSO 63

64. Messages PX : [ExC_04b] TSO 64

65. Messages PX : [UMM_05] TSO 65

66. CASE X3A PARTIAL COUPLING BEFORE OBK GCT + SECOND AUCTION

67. Case X3a partial coupling before OBK GCT + Second Auction 10:30 12:00 PX GCT Normal timing Exceptional timing Shadow Auction results CZC publication MP’s introduce orders Message to MP 11:1511:45 Coupling process 14:00 Notifications to TenneT Preliminary result publication * All timings are C.E.T >12:42>12:5515:30 12:30 13:00<13:50 Final results 13:20 Partial coupling before OBK GCT 67

68. TimingMessageAdditional actions for MPs Market results Publication deadline Local hub Notification Deadline Cross Border Notification Deadline 11:15 [UMM_02]: Risk of partial decoupling for one or more interconnectors CASC: invitation to update bids in the Shadow Auction system before 11:35 13:50 11:45 [UMM_03]: One or more interconnectors decoupled 13:50 ±12:30 [ExC_01]: Thresholds reached - Reopening of the order books PX: OBK open for 10 minutes after message 13:50 13:00 TSO: Delay in Market Coupling Results/ local Market Results publication and extension of Hub Notification deadline CASC: invitation to update bids in the Shadow Auction system before 13:40 13:5014:30 13:20 TSO: Delay in Market Coupling Results/ local Market Results publication and extension of Hub Notification deadline 13:5015:00 Case X3a partial coupling before OBK GCT + Second Auction CZC published at 10:30 on CASC website PX gate closure time at 12:00 Threshold reached -150€/MWh or 500€/MWh (-150£/MWh or + 500£/MWh)  Second Auction triggered (re-opening of Order Books) Publication of final market results before 13:50 68

69. Message CASC will add: Therefore, if relevant, we advise you to update your shadow bids at CASC EXAU platform before 13:40 PX : [UMM_02] 69

70. Messages PX : [ExC_01] 70

71. CASE X7 PARTIAL COUPLING AFTER GCT

72. Case X7 partial coupling after GCT 10:3012:00 13:50 PX GCT Partial coupling preparation* Partial coupling 12:4012:20 Normal timing Exceptional timing Coupling process / backup procedures Notifications to TenneT 12:30 Shadow Auction results Final results Preliminary result publication 13:38 CZC publication MP’s introduce orders MP’s update orders** 15:00 Note: *Shadow auction will be triggered at CASC ** Reopening of order book for 10 min 13:00 Message to MP 13:20

73. Case X7 partial coupling after GCT CZC published at 10:30 on CASC website PX gate closure time at 12:00 Publication of preliminary market results at the latest 13:38 Publication of final market results at the latest 13:50 Timing*MessageAdditional actions for MPs Market results Publication deadline Local hub Notification Cross border notification deadline 12:20 [ExC_03a]: Risk of Partial Decoupling CASC: invitation to update bids in the Shadow Auction system before 12:30 n/a 12:40 [ExC_04a]: Partial Decoupling – Reopening of the PX order books PX: OBK open for 10 minutes after message 13:50 14:00 13:00 TSO: Delay in Market Coupling Results/ local Market Results publication and extension of Hub Notification deadline CASC: invitation to update bids in the Shadow Auction system before 13:40 13:50 14:30 13:20 TSO: Delay in Market Coupling Results/ local Market Results publication and extension of Hub Notification deadline CASC: invitation to update bids in the Shadow Auction system before 13:40 13:5015:00

74. CASC will add: Therefore, if relevant, we advise you to update your shadow bids at CASC EXAU platform before 12:30. Messages PX : [ExC_03a] 74

75. Messages PX : [ExC_04a]TSO 75

76. NWE process overview 10:3012:00 15:30 CZC publication MP’s introduce bids Exceptional procedures 12:55 13:50 Process run Full decoupling preparation Full decoupling PX GCT 13:05 Partial coupling preparation Partial coupling 12:4012:2011:45 Partial coupling due CZC reason Normal timing Exceptional timing Notifications to TenneT

77. Decoupling scenarios 77

78. Communication to the market - summarized Time/ Deadline CommunicationMessage number Other messages CASCTSOLocal PX 10:00Risk of Partial/full Decoupling known in advance [ExC_03a/b]X 10:30Partial/full Decoupling known in advance[ExC_05a/b] 11:15Risk of partial decoupling for one or more interconnectors [UMM_02]X 11:45One or more interconnectors decoupled[UMM_03] 12:20Risk of Partial Decoupling in certain regions[ExC_03a]X ~ 12:30Second Auction[ExC_01]X 12:40Partial Decoupling – Reopening of order books[ExC_04a]X Regular publication time (12:42) Delay in Market Coupling Results publication[ExC_02]X NB 1. The fallback solutions and processes as well as their associated contents and timings are organized on local / regional level and not on NWE level. Timings are therefore indicative and additional messages can be sent (e.g. IFA CMS will also sent messages in case of a fall back situation) NB 2. The shift of notification deadlines only applies for CWE internally and CWE borders. 78

79. Communication to the market - summarized Time/ Deadline CommunicationMessage number Other messages CASCTSOLocal PX 13:00Delay in Market Coupling Results publication -> Extension of notification deadlines X 13:20Risk of Full Decoupling Delay in Market Coupling Results publication -> Extension of notification deadlines [EXC_03b] X 13:50Decision of Full decoupling Extension of notification deadlines [EXC_04b] X 14:25Thresholds reached during local auction[UMM_05]XX 79

80. 80

81. Smarter Day-ahead Smart bids project LINKED & EXCLUSIVE BLOCK ORDERS New Block Order Types

82. Linked Block Orders Definition: The execution of (a set of) profile block(s) is subject to the execution of another block Other standard execution rule apply in full Use: Allows to explicitly consider technical and economical constraints For example, a first block may include the start-up costs of a production facility, and additional blocks comprising fuel costs may be linked to this block Possibility to design complex linked structures (i.e. families)

83. Technical plant data Production cost 50 MW = 65 €/MWh Production cost 300 MW = 60 €/MWh Marginal cost to increase production from 50 MW to 300 MW = 59 €/MWh Marginal cost to increase from 50 MW to 200 MW = 61 €/MWh Marginal cost to increase from 200 MW to 300 MW = 56 €/MWh Bidding strategies Possible bidding strategy 1: Block 1: Sell 50 MW @ 65 € Block 2: Sell 250 MW @ 59 € linked to Block 1 → Unit is fully accepted if P>60; → or 50 MW accepted if P>65 Possible bidding strategy 2: Block 1: Sell 50 MW @ 65 € Block 2: Sell 150 MW @ 61 € linked to Block 1 Block 3: Sell 100 MW @ 56 € linked to Block 2 → Unit is fully accepted if P>60; → or 200 MW accepted if P>62; → or 50 MW accepted if P>65 Example Output (MW) Cost (€/MWh) Pmin5065 20062 Pmax30060

84. Technical plant data Production cost 50 MW = 65 €/MWh Production cost 300 MW = 60 €/MWh Marginal cost to increase production from 50 MW to 300 MW = 59 €/MWh Marginal cost to increase from 50 MW to 200 MW = 61 €/MWh Marginal cost to increase from 200 MW to 300 MW = 56 €/MWh Bidding strategies Possible bidding strategy 1: Block 1: Sell 50 MW @ 65 € Block 2: Sell 250 MW @ 59 € linked to Block 1 → Unit is fully accepted if P>60; → or 50 MW accepted if P>65 Possible bidding strategy 2: Block 1: Sell 50 MW @ 65 € Block 2: Sell 150 MW @ 61 € linked to Block 1 Block 3: Sell 100 MW @ 56 € linked to Block 2 → Unit is fully accepted if P>60; → or 200 MW accepted if P>62; → or 50 MW accepted if P>65 Example Output (MW) Cost (€/MWh) Pmin5065 20062 Pmax30060 Linked Block Orders: global wellfare considered The unit will also clear if baseload price is 60 ≤ P ≤ 65! The algorithm is not sequential, but considers the global wellfare of both blocks.

85. Linked Block Orders – use cases Optimise thermal power plants Offer plant using multiple orders, allowing it to run at different outputs, each reflected by their own cost level Run one/several hour(s) earlier or later if power prices remain interesting outside of the peak period Optimise consumption processes Only execute part B of consumption process if part A of process was started earlier Or only start A+B when combination does not exceed certain costs Optimise storage capacity Sell only during peak period if off-peak purchase order has been accepted and buy/sell combination is in the money

86. Exclusive Block Orders Definition: Within a set of profile blocks, at most one block can be accepted Other standard execution rule apply in full Use: Allows to propose for trading different production patterns For example, a specific production plant can be offered at a low price for baseload production, at a medim price for peak load production >at a high price for super peak load production …but can only be executed once

87. Exclusive Block Orders Optimise thermal power plants Similar to using Linked Block Orders Optimise combined heat & power installations Heat demand with flexible timing, or some heat buffer Flexibility might allow to produce heat & power when power prices are highest, using several exclusive production profiles Optimise demand side management Case: End user can stop consumption, but only if DAM prices > 500 €/MWh and for max 2 hours/day “Program” load shedding on the DAM on the most expensive hours (and only of threshold is reached), using a combination of exclusive blocks of 2 hours Block 1: hours 1 & 2, Block 2: hours 2 & 3, …

88. Benefits of Smart Orders ‘Smarter’ orders give more flexibility when introducing orders for the auction  Better reflecting technical constraints of generation units E.g. no partial clearing at non-cost reflective price levels, lower PRB frequency (plant offered in smaller blocks), …  Easier bidding, less operational work Result: better asset optimization (generation + consumption) Better price formation More robust against uncertainties faced when making day-ahead price forecasts

89. Static Demo Linked Family

90. Linked Family - Entry Two options are available to submit a Linked family Option 1 Option 2

91. Linked Family - Entry A visual representation helps the trader to identify mistakes: Red screen for Buy side (Green for Sell side) Show the number of Family group submitted Give a representation of the family Indicate the parent of the block

92. Linked Family - Entry Linked family can combine Buy and Sell: the background turns blue and the columns turn red or green to represent Buy or Sell orders Graph shows both sidesPressing this button shows the family in a tree Indicates the side of the block

93. Linked Family - Entry A Tree View shows the hierarchical relationship between orders Pressing this button lead the trader back to the entry screen Block 4 can only be traded if Bloc 2 and block 1 are trade Color represents the side of the order (Buy or Sell). Colored squares make the link with the graphs above.

94. Static Demo Exclusive Group

95. Exclusive Group - Entry Two options are available to submit an Exclusive Group Option 1Option 2

96. Exclusive Group - Entry A visual representation helps the trader to identify mistakes: Green screen for Sell side (Red for Buy side) Number of exclusive group will be limited – limit to be defined Out of all the order entered, maximum one will be traded

97. Exclusive Group - Entry Linked family can combine Buy and Sell: the background turns blue and the columns turn red or green to represent Buy or Sell orders Graph shows both sides Indicates the side of the block

98. Smarter Day-ahead Smart bids project AUTOMATIC ORDER SUBMISSION TOOL Submit Orders using XML files

99. Automatic Order Submission Intro New tool to facilitate submitting orders in automated way using XML files Easier workflow Eliminates operational risks involved with Paste from Excel functionality Planned to be available before launch of Smart Orders

100. Automatic Order Submission Details Software to be installed alongside EuroLight® client Tool will monitor specific folder and Process all xml files contained in folder Give feedback via « acknowledgement » xml file Orders introduced via tool will be visible in EuroLight® Order Book Editing via EuroLight® possible

101. Automatic Order Submission XML Specifications & Testing Draft manual & specifications of xml files available on APX website Scheduled to be available on the Member Testing environment as of 23 October

102. CHANGE TO RULES APX Power Market Rules – NL allocation rules 102

103. APX Power NL Market Rules Market Rules Changes with respect to countries involved in Market Coupling Execution conditions for Linked & Exclusive Block Orders Delisting Strips Market Already delisted in practice by removing all eligible instruments Various clarifications (with no impact on members) 103

104. APX Power NL Market Rules Instrument Specifications Day-Ahead Market Minimum price will become -500 €/MWh Maximum price will remain +3000€/MWh Availability Linked & Exclusive Block Orders confirmed Changes to operational timings Strips Market Chapter will be removed Changes regarding rollback 104

105. Changes to NL allocation rules TenneT rules No changes Dutch grid code Fallback timings and principles (also for NorNed) brought in line with the NWE procedures Rollback possibility to change back to CWE market coupling for BE-NL and DE-NL borders and ITCV market coupling for NorNed Inclusion of the losses for the NorNed cable in the market coupling is pending regulatory approval 105

106. PUBLICATIONS Capacities – Flows – Prices – … 106

107. Publications www.apxgroup.com Market prices & auction volumes www.tennet.eu & energieinfo.tennet.orgwww.tennet.euenergieinfo.tennet.org NTC values, ATC values, flows www.casc.eu ATC values, Shadow Auction results (if any) Yearly, monthly capacity auction results www.europeanpricecoupling.com Daily prices, ATC values & flows 107

108. PLANNING TO GO-LIVE & MEMBER TESTING 108

109. 109 NWE Target Go-live Date The Target Go-live date has been set at 26 November 2013 for Delivery Date 27 November 2013 Go-live date is subject to Successful completion of the Simulation Test phase; Successful completion of the Member Test phase; Signing of all contracts and agreements; Regulatory approval Final Go/No Go decision to launch will be taken early November Launch activities have been started

110. 110 NWE Simulation Testing Simulation Testing phase by NWE project parties until 31/10/2013 Normal Day scenarios Backup scenarios Fallback scenarios (full decoupling and partial coupling) Complexity due to testing with 50+ systems and 150+ interfaces involved New partial coupling procedures and system functionality NWE Parties are working hard to meet the acceptance criteria for simulation testing

111. 111 Joint NWE Member Tests NWE Member Test planned for 14/10 – 25/10 Timing delayed to afternoon, but same process time On request of members, testing of nomination process has been added to all test days Smart Orders are available in NWE Member Testing

112. Local Member Tests Smart Orders Smart Orders are available on Member Test environment already Will remain available until (and after) NWE Go-live From 28 October until 15 November, test auction will be organized by APX Smart orders will be available to see how matching results are presented Details on these local tests will be communicated later 112

113. Local Member Tests Automatic Order Submission Tool Scheduled to be available on Member Testing environment as of 23 October Exact details will be communicated later Will be available on Production environment prior to the NWE go-live Please note that the Smart Orders functionality will only be available after NWE Go-live 113

114. 114 Disclaimer: All messages and timings are subject to changes after final testing.

115. CONCLUSION 115

116. SUMMARY Annex 116

117. PCR PROCESS TIMINGS for NWE 117 * This is the maximum time which could be used to solve a technical problem in order to avoid a decoupling. If the technical problem is resolved in less than 55 min than the next processes will start earlier. ** the Second Auction in CWE / GB is a single process taking 48 minutes. *** the Special Procedure for the Nordics is an iterative process which will run the number of times necessary taking into the 13.50 full decoupling deadline when NWE is coupled.

118. PCR PROCESS TIMINGS for NWE 118

119. Full decoupling before OBK GCT (12:00) 119 Notification Process 60 min Notification Process 60 min Notification Process 60 min OBK GCT = 12:00 Final Notification deadline =15:30 which applies to: Internal CWE, CWE-GB and CWE-Nordic interconnectors Publication of prelimi- nary results =12:42 * This is the maximum time which could be used to solve a technical problem in order to avoid a decoupling. If the technical problem is resolved in less than 55 min than the next processes will start earlier. ** the Second Auction in CWE / GB is a single process taking 48 minutes. *** the Special Procedure for the Nordics is an iterative process which will run the number of times necessary taking into the 13.50 full decoupling deadline when NWE is coupled. Case X10 Case X12 Case X11 Full decoupling before 12.00 Idem + delay Idem + 2 nd Auction CWE Full decoupling 42 min Full decoupling 42 min Full decoupling 42 min Max. Time /Flexibility to solve technical problems 55min* 2 nd Auction CWE/ GB 28 min**

120. Publication of prelimi- nary results =12:42 Partial Coupling before OBK GCT (12:00) 120 Case X1Case X2Case X3a Case X3b Case X4a Case X4b

121. 121 * In case X6b, the NPS special procedure, being an iterative process, may take the same timeframe as when all markets are still coupled, but this is not relevant in a full decoupling since Nordic and Baltic TSOs do not impose a nomination deadline, but instead NPS can take as long time as needed to finish the Price Calculation and subsequent notifications can be submitted (updated) by NPS and market parties to relevant TSOs until about 1 hour before delivery hour. Partial Coupling before OBK GCT (12:00)

122. Partial coupling after OBK GCT (12:00) 122 * In case X9b, the NPS special procedure, being an iterative process, may take the same timeframe as when all markets are still coupled, but this is not relevant in a full decoupling since Nordic and Baltic TSOs do not impose a nomination deadline, but instead NPS can take as long time as needed to finish the Price Calculation and subsequent notifications can be submitted (updated) by NPS and market parties to relevant TSOs until about 1 hour before delivery hour. Case X7 Case X8 Case X9a Case X9b

123. Communication to the market - summarized NB 1. The fallback solutions and processes as well as their associated contents and timings are organized on local / regional level and not on NWE level. Timings are therefore indicative and additional messages can be sent (e.g. IFA CMS will also sent messages in case of a fall back situation) NB 2. The shift of notification deadlines only applies for CWE internally and CWE borders. 123 Time/ Deadline CommunicationMessage number 12:20Increased risk for partial coupling in certain region TSO message to MPs: Inform Market of fall back processes (update of explicit shadow auction bids) [EXC_03a] ~ 12:35Second Auction PCR message to PXs and subsequently MPs and TSOs: Second Auction is declared [EXC_01] Regular publication time (12:42) PCR message that process is delayed from PXs* to TSOs and MPs (timings to be confirmed). (TSO message to MPs: Inform Market of fall back processes) Local PX msg

124. Communication to the market - summarized Time/ Deadline Communication 13:20PCR message to PXs and subsequently MPs and TSOs: Inform Market about Incident and risk of decoupling. TSO message to MPs: Inform Market of fall back processes (update of explicit shadow auction bids) & shifting of notification deadline to 15h00 [EXC_03b] 13:40End of update shadow auction bids Start of explicit shadow auction calculation - 13:50Decision of Full decoupling PCR message to PXs and subsequently MPs and TSOs: Full decoupling is declared (TSO message to MPs: notification deadline has been extended to 15h30) [EXC_04b] 13:50-14:00Publication of the explicit shadow auction fall back results (target is to publish immediately after 13.50 and at the latest at 14:00, feasibility of these timings must still be confirmed) - 13:55-14:15Update of local auction bids according to shadow auction results Local PX msg