Introduction to the Capacity

Allocation & Congestion

Management Network Code

1st Stakeholder Group Meeting

Mark Copley
ENTSO-E Market Advisor
Background & Context

1) ENTSO-E’s legal role

2) The importance of codes

3) Overview of the network code development process.

Article 8: ENTSO- Article 7: The Article 6: Creating Article 4: ENTSO
E’s activities scope of network network codes
codes • Charged with working
• Network Codes • In line with ERGEG to complete the
• Ten Year Network framework guidelines. internal market.
• Cross border &
Development Plans. market integration • Which become
• Generation adequacy. issues. binding.
• Winter and summer • Without prejudice to • And involve extensive
outlooks. Member States’ right consultation.
• Work programs and to establish codes.
annual reports.
1) ENTSO-E’s role according to Regulation (EC) 714/2009
2) Why are network codes important?

• They are legally binding.

 Every TSO, generator and load will have to comply.

 While they will not duplicate national regulation, national regulation has to be
consistent.

• Hence, creating fit-for-purpose network codes is in everyone’s interest.

• A mayor challenge for drafting teams lies in ensuring that codes are
accessible to all and represent a range of views.
3) The Network Code Development Process

Request to draft a FWGL

EC On a topic identified in art.8 (6) of Regulation EC 714/2009

Development of
FWGL Development of the FWGL (6 month period)
In consultation with ENTSO-E, stakeholders, with input from Ad-Hoc
ACER (ERGEG)
Expert Group

Request for ENTSO-E to draft a network code

EC According to FWGL submitted by ACER

Period in which ENTSO-E can develop a NC (12 month period)

ENTSO-E In consultation with stakeholders according to FWGL

Development of
NC Assessment of NC
ACER Recommendation of NC to EC

Comitology Process (where appropriate)

EC In consultation with all stakeholders resulting in legally binding NC
The Capacity Allocation & Congestion Management Network Code

1) The suite of network codes

2) The scope of the CACM code

3) High-level overview of issues covered

4) Interactions with other areas

1) The network codes required to facilitate the IEM

System System
Markets
Operations Development

Network code on
Capacity Allocation Network code on
operational security
& Congestion generator
Management code connection
Network code on
operational planning
& scheduling
Network code on
Network Code on
DSO & industrial Network code on
balancing
load connection load frequency
control & reserves
2) Scope of the CACM code

Forward Capacity Day Ahead Intra-day

Balancing
markets Calculation Markets Markets
• To be • Within the • Within the • Within the • Subject of
tackled at CACM CACM CACM a separate
a later code code code code
stage.

The CACM code will be a single document

3) High-level overview of the CACM code

Introduction, applicability, entry into force, glossary etc

Day Ahead Capacity

Intra-Day Capacity Allocation
Allocation

Capacity calculation

Firmness & cost recovery

The exact scope, structure & content will be defined by the Final
Framework Guideline
4) Interactions with other areas

There are several

Draft
governance
ongoing issues relevant
guideline
to CACM.

They need to be
managed, monitored,
CACM considered and reflected.
Vallidation of Other Network
PCR algorithm
code Codes

Without delaying timings

or overcomplicating the
code.
Ongoing
implementation Lessons learned in the
projects
CACM code also need to
be communicated
 Proposed process to develop
the CACM code

1st Stakeholder Group Meeting

Mark Copley
ENTSO-E Market Advisor
Agenda

• The draft FG

• ENTSO-E internal working structure

• Sign-off processes

• Project plan

• Stakeholder involvement

• Formal consultation
The draft FG and code timescales

• The exact timescales for developing the CACM code will depend on
when we receive an invitation letter from the Commission.

• We understand ACER will submit a final FG for approval shortly.

• We tentatively expect a formal invitation and “the clock to start

ticking” in September 2011.

• That will then give us 12 months to develop and consult on the

CACM network code.
ENTSO-E Internal Working Structure

• The 12 month timescale will be challenging.

• So we have tried to put effective structures in place, start preparing

early and use the “scoping” phase to make progress.

• 3 drafting teams have been created and have started work.

• Hence we are beginning to identify and tackle important issues.

Drafting Teams

CACM network code

Capacity Intra-Day team

Day Ahead Team
Calculation Team Frank
Oliver John -
Clotilde Levillain - Vandenberghe -
Amprion
RTE Elia

ENTSO-E Secretariat
Drafting Team Composition

Consistent
A convenor membership from
across TSOs

A member of the
Legal support ENTSO-E
Secretariat staff
Working structures & sign-off processes

ENTSO-E Assembly

• Approves policy positions

• Approves versions for publication

ENTSO-E Market Committee

• Develops policy positions

• Advice & feedback

ENTSO-E Market Integration Working Group

• Advises on issues
• Critiques outputs
Expected Timescales

 Exact timescales will be determined by when we receive the FG.

 We have tried to make progress in anticipation of this.

 We are likely to spend the remainder of 2011 developing drafts and

engaging to understand views.

 Then to finesse documents and get internal approval during Q1

2012.

 Before formal consultation in late spring.

Stakeholder engagement

Stakeholder
Group

Formal
Workshops
consultation
ENTSO-
E

Bilateral
Discussions
Updates
(as
required)
Formal consultation

• ENTSO-E will formally consult on the CACM network code.

• The code will be accompanied by a consultation document providing more

detail & explanation in a less formal manner.

• Two months will be provided for comments.

• ENTSO-E is developing an IT tool to help facilitate consultation.

Other forms of consultation

• Each code involves different issues, which need tackling in different ways.

• Hence each team will decide on the forms of consultation that are needed.

• This may include bilateral meetings, workshops (such as the one

tomorrow)with a wider or more technical audience.

• This group will be kept abreast of discussions and regular updates will
appear via the website,

• We are conscious of the need for openness, inclusivity and transparency.

• We welcome ideas on how to achieve this.

 Challenges & issues to be
tackled in developing the CACM
network code

1st Stakeholder Group Meeting

Mark Copley
ENTSO-E Market Advisor
Purpose of this presentation

• To briefly outline some challenges we have encountered to date.

• To provide an opportunity to discuss these (and other) issues – and to

suggest approaches and/or solutions.

• To raise other questions and challenges.

 It should be noted that work is at a very early stage and things we present
are initial thoughts/ work in progress which are not approved positions.
Issue 1 – What is a cross border issue?

• A fairly fundamental question but not clearly defined in the draft FG.

• Is a consistent definition across all network codes required?

• The decision affects the extent to which codes and national legislation
overlap and impacts on the scope and complexity of the code.

• Vitally important but highly contentious!

Issue 2 – How should the code be written?

• Network codes need to be accessible and understandable to all market

participants (who they bind).

• What is the right trade-off between accessibility and detail? I.e. should the
code aim at setting principles or be very prescriptive?

• And how is this question influenced by the fact it is a European regulation?

Issue 3 – How can codes adapt when the market changes/

• The energy market is dynamic.

• Codes have to reflect what happens in practice.

• We have to avoid a scenario where a code constrains or prevents a beneficial

development.

• But there is no change management process and all changes (irrespective of

size) have to go via Comitology.

• What are the implications for resources, for the future and for the way the
code is initially written?
Issue 4 – How much can feasibly go in a code?

• The CACM code covers issues including the Common Grid Model, the SOBF,
the CMM and the price coupling algorithm. Is it feasible to put these inside a
code?

• The detail needs to be available in an accessible form to interested market

participants, but is the body of a European regulation the right place?

• What other structures could be considered?

Issue 5 – How do we manage interactions with other areas of work?

• PXs and TSOs both have important roles in the market coupling process and
have to work together.

• The EC governance guideline will define an appropriate division of roles and

responsibilities.

• But it remains under development. What are the right working assumptions
to allow code drafting?

• How do we interface with issues which will be in network codes in due

course but haven’t been written yet?
Mark.Copley@entsoe.eu