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Cross-border allocations Intraday allocations at the French-Belgian border: a way for balance responsible parties to deal with unforeseen circumstances In the event of unforeseen circumstances or new opportunities, ARPs can add imports or exports to their portfolio on the day of transmission, giving them extra ways of managing their balance in real time. Indeed, the interconnected European grid enables market parties to import and export electricity across the border between two countries.

However, the exchange possibilities are not unlimited. The capacity available for the market on the FranceBelgium interconnection has to be first calculated on the basis of security. It is then made available for the market.

To meet this need, Elia and RTE, have jointly developed an intraday capacity allocation mechanism.

This intraday mechanism allocates the available capacity based on an iterative prorata process.

I. Intraday allocation mechanism on the France-Belgium interconnection: principles After day-ahead activities have closed, an ARP may be faced with unforeseen circumstances or new opportunities, such as a production unit breaking down, a change in the renewables forecast (affecting the level of wind or solar power production), a production unit that was being overhauled returning to service sooner than expected, disruption to a grid user’s consumption (breakdown) and so on.

Confronted with modifications of this type, the ARP has a number of ways of managing its balance in real time: • modifying the production units for which it is responsible for (see sheet: "The CIPU contract"); • modifying the offtake of the grid users for which it is responsible; • exchanging energy with other ARPs on an intraday basis (see sheet: "The intraday Hub"); • making additional imports or exports across the France-Belgium border; • making additional imports or exports across the border Netherlands-Belgium via intraday market coupling (see sheet:" Intraday allocations at the Dutch-Belgium border") One of the possibilities to adjust an ARP portfolio to the real-time situation is to make import or export cross-border transactions in intraday on the French-Belgium border1. Nevertheless, this cross-border exchange is limited to the obtained capacity by the ARP during the allocation process.

I.1. Why an allocation process?

Since an interconnection has only limited capacities to allow import and export across the border, the capacity that can be offered to the market on this interconnection has to be first calculated on the basis of safety criteria. It is then allocated to the interested market parties.

At that point, the allocation mechanisms determine the rules how capacities can be allocated to the market parties in a nondiscriminatory way.

The intraday allocation, is done in two stages: • first the party acquires a capacity or physical transmission right (PTR): this is the allocation stage. The allocation of capacity is carried out by the joint auction office of RTE in accordance with the market mechanism described in the IFB rules; • the party can then use the cross-border capacity to program the exchange. This is the nomination stage.

I.2. Intraday gates system Intraday capacity allocation on the France-Belgium interconnection is executed several times a day for the same delivery day, using a gates system. Each gate follows identical and strict procedures which contain different activities: a.o. the capacity requested period, the allocation and the nomination periods as described on the figure below:

1 Another mechanism applies on the Dutch-Belgium interconnection, see sheet: "intraday allocations at the Dutch-Belgium border".

End of Gate N-1

Allocation gate closure N (H)

Period during wich intraday capacity requests for the gate N are possible

1

2

3

H+30’

H+1u

H+1u45

Allocation

Nomination

H+2h Delivery

Matching

Neutralisation time 1

Deadline for notification of intraday access authorisation

2

Deadline for receiving intraday nominations

3

Deadline for RTE and Elia accepting intraday nominations

The intraday mechanism at the France-Belgium interconnection contains twelve gates. The first gate is at 9 p.m. on the day before transmission, and the last is at 7 p.m. on the day of transmission. The table below lists, for each gate, the deadlines for sending capacity requests and for sending nominations.

Gate (Hours)

Deadline for the receiving of capacity request

Deadline for the receiving of cross-border Nominations

Delivery period on day D

21 :00 (on D-1)

21 :00 (on D-1)

22 :00 (on D-1)

00 :00 – 24 :00

23 :00 (on D-1)

23 :00 (on D-1)

24 :00 (on D-1)

01 :00 – 24 :00

01 :00

02 :00

03 :00 – 24 :00

01 :00 03 :00

03 :00

04 :00

05 :00 – 24 :00

05 :00

05 :00

06 :00

07 :00 – 24 :00

07 :00

07 :00

08 :00

09 :00 – 24 :00

09 :00

09 :00

10 :00

11 :00 – 24 :00

11 :00

11 :00

12 :00

13 :00 – 24 :00

13 :00

13 :00

14 :00

15 :00 – 24 :00

15 :00

15 :00

16 :00

17 :00 – 24 :00

17 :00

17 :00

18 :00

19 :00 – 24 :00

19 :00

19 :00

20 :00

21 :00 – 24 :00

I.3. Financial aspects The allocation mechanism can be used free of charge. Currently the intraday capacities obtained are also free of charge.

II. A strict operation procedure during the gate II.1. intraday capacities available The available capacities for the opening of the intraday market are calculated by the TSOs taking into account safety criteria and previous nomination (see sheet: "Nominations: principles and methods").

The Joint Operator publishes the capacity available for a given gate on its website 15 minutes before the start of the gate. However, intraday capacity requests can also be submitted before this announcement.

Whenever a cross-border transaction is validated by the TSOs, the cross-border capacity decreases in the direction of the transaction and increases in the opposite direction for the next intraday gate.

II.2. Submission of intraday capacity requests Intraday capacity requests are submitted to the Joint Operator, using the electronic form of the Joint Operator. Each request specifies whether it concerns an import or an export, and the capacity that the market party wants to obtain for each hour of the delivery period that applies to the gate in which the market party is participating. The capacity requested may differ from one hour to the other. A participant can have only one request active for each gate and for each direction (import or export), but may modify its request if desired as long as it adheres to the stipulated submission deadlines.

II.3. Allocation of capacity Capacity is allocated to the participants using the iterative prorata mechanism (see explanation below). The participant gets a confirmation of the capacity it has obtained in the allocation process no later than half an hour after the submission deadline.

An iterative prorata mechanism Intraday capacities are allocated using an iterative prorata mechanism, prioritizing small requests. The mechanism allocates intraday capacity in a number of stages, for each hour of the delivery period that applies to the gate in question. To illustrate the process, we give an example below.

First stage: a definition of capacity threshold based on the number of requests and the corresponding capacity allocation after this first iteration In the first stage, the total capacity available is divided up evenly amongst the participants that have submitted a request for the gate and hour in question. The participants are allocated capacities up to a certain threshold. The minimum between the capacity requested and this threshold is allocated to each participant Example: At the 5 p.m. gate, a capacity level of 950 MW is available for the hour 7 - 8 p.m. Five market parties take part in the intraday allocation for this gate, as shown by the table below. This means that a maximum capacity level of 190 MW (= 950/5) can be allocated to each of the gate participants. As the first two participants have submitted a request for less than 190 MW, their request can be met in full. The same does not hold for the other three participants, which have asked for 500 MW. Request (MW)

Threshold in the

Capacity allocated in the

1ste stage (MW)

1ste stage (MW)

Participant 1

25

190

Participant 2

75

190

25 75

Participant 3

500

190

190

Participant 4

500

190

190

Participant 5

500

190

190

1600

950

670

Total

Second stage: allocation of the capacity remaining after the first stage Based on the same principles, the capacity remaining after the first stage is allocated amongst the participants that have not yet obtained all of the capacity they requested.

In our example, at the end of the first stage, there was still a capacity level of 280 MW to allocate. The 280 MW must be distributed amongst the three participants that have asked for 500 MW and have as yet only obtained 190 MW. This means that a maximum capacity level of 93 MW (= 190/3 rounded to the lowest MW) can be additionally allocated to each of the three remaining participants for the hour in question. At the end of the second iteration, only 1 MW remains to be allocated amongst the three participants. As this capacity can no longer be distributed amongst the remaining participants (1/3 rounded to the lowest MW is 0), the iteration process comes to an end.

Request (MW)

Capacity allocated in the st 1 stage (MW)

Capacity outstanding from request (MW)

Threshold in the 2nd stage (MW)

Capacity allocated in the nd 2 stage (MW)

Participant 1

25

25

Participant 2

75

75

0

Participant 3

500

190

310

93

93

Participant 4

500

190

310

93

93

500

190

310

93

93

1600

670

930

279

279

Participant 5 Total

0

Supplementary stages If necessary, i.e. if all the intraday capacity available has not been allocated after two iterations, there are further iterations following the same principles, until the total capacity available has been allocated amongst the market parties.

II.4. Nomination submitted to Elia and RTE The participant has to submit a nomination to Elia and to RTE in order to confirm the imports or exports relating to the obtained capacity. The intraday nomination is a new transaction and is added to the ARP’s portfolio meaning that it does not modify the previous cross-border nominations submitted in Day-ahead or previous intraday gates.

It’s not obliged to submit a nomination for the same volume as the obtained capacity. The not used volumes are lost without any compensation being provided, in accordance with the ‘use it or lose it’ principle. These unused capacities are put back on the market at the subsequent gate.

The nominations for exchanges between France and Belgium are made: • in one direction or the other, within the limits of the capacity obtained in that direction; • before the nomination deadline for the concerned gate.

Only the participant who obtained the capacity is allowed to nominate at both TSOs, respecting the A-to-A principle (that is to say that the market participant is obliged to trade with himself in the other country).

II.5. Nomination controls by Elia and RTE The nominations submitted to Elia and RTE at one gate must be identical. Elia and RTE check at each gate if all nominations match.

After the check, Elia and RTE confirm the nomination to the party. The confirmation is sent to this party no later than 15 minutes before the delivery period.

III. Benefits of the allocation mechanism The intraday allocation mechanism set up on the France-Belgium interconnection provides the balance responsible parties with extra ways of managing their balance in real time. This mechanism enables them: • to find a solution in the event of unforeseen circumstances, or to take advantage of new opportunities: a production unit or an industrial process breaking down, an unexpected fluctuation in consumption, a production unit that was being overhauled returning to service sooner than expected, a change in the renewables forecast and so on; • it gives more ways of controlling the real-time balance in an ARP’s portfolio with real offtakes and/or injections.

IV. Contractual basis To be authorized to participate in the intraday allocation processes, the market parties must:

V. Future developments The transmission system operators for Northern Western Europe (NWE) have launched a project to harmonize the intraday capacity allocation mechanisms on the different interconnections in their region. This means that the intraday allocation mechanism set up on the France-Belgium interconnection will evolve in connection with this project.

The intraday allocation mechanism on the France-Belgium interconnection in 5 key points • The capacities available on the France-Belgium interconnection are limited. They must therefore be distributed in a transparent way amongst the market parties, using an allocation mechanism.

• Elia and RTE, the Belgian and French transmission system operators have, amongst other things, set up a joint mechanism of intraday allocations on the France-Belgium interconnection.

• The intraday allocation enables market parties to deal with unforeseen circumstances or take advantage of new opportunities that present themselves on the day of transmission.

• An iterative prorata mechanism is used to allocate the capacities to the parties.

• The intraday capacities for one delivery day are allocated during twelve gates.

C3-E-11.04.2012 / Non-contractual document / Editor: J. Vandermeiren, Bd de l’Empereur 20, 1000 Brussels

• endorse the Rules for Capacity Allocation for the France-Belgium Interconnection (IFB Rules) by signing the participation agreement in Appendix 1 of that document; • deposit the requested bank guarantee with the Joint Operator; • have concluded an ARP contract with Elia as well as the corresponding contract at RTE in order to nominate cross-border capacity from/to the Belgian grid;