Balance The day-ahead hub: a platform at the centre of ARPs’ activities In order to ensure balance within its control area, Elia relies on the provisions set out in the contracts it signs with the ARPs. They stipulate that every ARP has to always maintain the quarter-hourly balance of the offtakes and injections in its perimeter. The ARP meets the balance objective via various operations. In a liberalised market, the energy injected at a given moment can be intended for an access point in another ARP’s perimeter. The above-mentioned operations include the possibility of exchanging energy with another ARP. These energy exchanges are made on the Elia Hub, an electronic platform for exchanges amongst ARPs. Exchange nominations have to be submitted to Elia on a day-ahead basis (day D-1). The platform is provided to the market players free of charge. The day-ahead Hub enables the market players to become ARPs more easily, which contributes to the efficient operation of the liberalised market.
I. The day-ahead hub: principles Any market player that assumes the role of ARP has to maintain the quarter-hourly balance (see sheet "The balancing mechanism: ensuring the balance of the Elia control area") between the offtakes and injections in its perimeter. Quarter-hourly balance is needed in both real time and in the forecast phase represented by nomination. There are different types of offtakes and injections depending on whether: • the ARP is responsible for physical offtake at an access point (in the Elia grid or Distribution System Operators’ or DSOs grids); • the ARP is responsible for physical injection at an access point (in the Elia grid or DSOs’ grids); • the ARP is exchanging energy with another ARP in the Elia control area; • the ARP is importing or exporting energy across the border with France or the Netherlands.
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Amongst other strategies, two ARPs can therefore make energy transfers in the Elia control area. Such transfers take place on a day-ahead basis (day D-1) on the Elia Hub, an electronic platform that is used for exchanges between ARPs. This platform, which ARPs can access free of charge, enables ARPs to perform transactions without having to be physically present in Belgium. The exchanges are carried out on a quarter-hourly basis, with an accuracy of 0.1 MW.
I.1. Nominations submitted subject to conditions If they want to transfer energy between them on the day-ahead Hub, the two ARPs have to submit a nomination to Elia via the E Nominations application. The day-ahead Hub nomination that is submitted to Elia specifies the volumes of the energy exchange as such, leaving the ARPs to arrange amongst themselves how the transfer will be carried out (type of operation, financial details, etc.).
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On daily basis, capacities are allocated in one step, by means of the market-coupling mechanism: this is the implicit allocation (consult the sheet on “Market Coupling”).
The nominations have to meet a number of conditions (see also sheet "Nominations: principles and methods"): • they must be submitted by no later than 2 p.m. (offtake points) and 3 p.m. (injection points) on day D-1, which may also be at a weekend or on a public holiday. Moreover, after this deadline no further modifications can be made to a validated nomination; • they must give the name of the ARP submitting the nomination and the ARP which is counterparty to the exchange as well as the exchange programme, on a quarter-hourly basis; • the two ARPs taking part in the transaction must submit consistent nominations.
Electricity Transmission
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I.2. Inconsistencies under control The values submitted by the two ARPs taking part in a transaction must be the same. However, it may that, during the process, only one of them submits its nomination or there is a discrepancy between their respective nominations. This is known as an "inconsistency". The E-Nominations platform (see sheet "Nominations: principles and methods") that has been developed by Elia and is based on the principle of double nomination, enables the ARPs to establish these inconsistencies in real time. The nomination status check in the "E-Nomination" tool enables the ARP to find out how each of its transactions is progressing. This makes it easy to identify transactions where a correction needs to be submitted or where the ARP that is counterparty to the transaction needs to be contacted. Furthermore, whilst no further modifications can be made to a consistent nomination after 2 p.m. on day D-1, an ARP may correct any accidental inconsistencies in a nomination up to 2.30 p.m. on that day. After 2.30 p.m., any inconsistency that has not been corrected will create an imbalance. In such a case Elia can, depending on the situation: • accept the nomination and charge the ARP concerned the tariff for external inconsistency. If the counterparty has not made a nomination, the ARP that has made a nomination is charged the full amount by Elia. If the inconsistency is the result of a divergence between the two ARPs’ respective nominations, each of them pays 50% of this rate; • refuse the nomination. After acceptance by Elia, no further changes can be made to a transaction.
I. 3.Diversity of supply The ARPs operating on the day-ahead hub use it to perform various types of energy exchange operations. They can, for example: • make Over The Counter (OTC) purchases or sales (i.e. bilateral trading contracts) – these may be occasional operations or relate to medium or long-term agreements; • distribute volumes of energy amongst various subsidiaries in a single group of companies – for example, a company’s trading arm can purchase energy for the whole group (in Belgium and abroad) and then distribute the acquired volumes amongst the group’s subsidiaries;
• act as a relay in European energy transit; • share with another ARP the energy taken off the grid by an industrial customer or injected into the grid by a production unit. They do this without having to sign the appendices of the access contract relating to this operation. Sharing energy in this way gives the ARPs complete freedom in deciding on how the transaction will work (for example, in terms of distribution and flexibility); • submit nominations for energy purchases or sales on the Belpex exchange or on Belpex’s.
II. Benefits of the day-ahead hub The day-ahead hub system provides its users with multiple benefits: • a market player wanting to set up in Belgium can assume the role of ARP more easily: • it
can be active as an ARP without physically being present in Belgium. It can also sell the energy from a production unit without having to take direct responsibility for supplying customers, or sell energy to customers without having its own production units;
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can limit its activities to occasional energy sales and purchases either within the Belgian area on the day-ahead hub or involving other countries (see the sheets on Yearly and monthly allocations at the French-Belgian / Belgian-Dutch border). This means that it can, without any restrictions, decide on a day by day basis, whether it wants to be active and manage a perimeter of forecastable injections and off-takes with no major risk in terms of real-time balance; • this facility is user-friendly and access is provided free of charge. By allowing the ARPs to diversify their forms of supply more easily, it also increases the liquidity of the market, which has a positive impact on the end consumer; • Elia allows the ARPs to immediately identify and correct any nomination errors; • the multiple new opportunities provided by the day-ahead hub make a significant contribution to the efficient operation of the liberalised market – a market in which mechanisms such as an exchange, a continuous market and also the OTC market are key components. Complementary intraday hub arrangements have also been put in place (see sheet "The intraday hub: energy exchanges between ARPs to deal with unforeseen circumstances").
The day-ahead hub in 5 key points • Elia provides the ARPs with a platform allowing them to transfer energy amongst themselves on day D-1. • To carry out such energy transfers, the two ARPs taking part in the transaction have to submit nominations. The values in the two nominations must be the same. Nominations are defined on a quarter-hourly basis with an accuracy of 0.1 MW. • The double-nomination system enables ARPs, via the E Nominations service, to identify and correct any inconsistencies between the two nominations submitted for a single transaction. If the inconsistency is not corrected in the stipulated time-frame, Elia can refuse the nomination or bill the ARP, taking as its basis the rate for an external inconsistency. • The energy transfers between two ARPs on the day-ahead hub can result from various operations: OTC purchases or sales, distribution of energy amongst subsidiaries of a single group, purchases or sales on Belpex, and so on. • The day-ahead hub enables a market player to become an ARP more easily and makes a significant contribution to the efficient operation of the liberalised market.
Any ARP (i.e. any party that has concluded an ARP contract with Elia) can exchange energy with any other ARP on the day-ahead Hub without the need for an additional contract.
E4-E-16.02.2011 / Non-contractual document / Editor: J. Vandermeiren, Bd de l’Empereur 20, 1000 Brussels
III. Legal and contractual basis