Energy & Environmental Economics A.Y The electric power industry- Further Information

Transcription

1 Energy & Environmental Economics A.Y The electric power industry- Further Information

2 Electric power in Italy

3 The market for electric power in Italy The electric Exchange in Italy is created in 1999, starts operations in 2005 Actors in the electric system are - Political, administrative, technical actors: Government (Ministero dello Sviluppo Economico), Parliament, Autorità per l Energia Elettrica e il Gas - Terna s.p.a Ownership: 29,9% Cassa Depositi e Prestiti (Government), 18,8% other large shareholders, market 51,3% Owns the National Grid; technical management of despatching. - GSE s.p.a.(gestore Servizi Energetici) 100% Ministero dell Economia. Controls two companies: GME s.p.a. (Gestore del Mercato Elettrico ) Manages the Electricity Exchange. AU s.p.a. (Purchases)

4 The Electric Exchange markets The spot market consists of: - MGP: Mercato del Giorno Prima (Day-Before Market) - MI : Mercato Infragiornaliero (Within-Day Market) - MSD: Despatching Market GME TERNA

5 Forward markets are: - Mercato a Termine dell Energia (Physical delivery of energy) - Platform for physical delivery of financial energy futures (IDEX) - Piattaforma dei Conti Energia a Termine (PCE) (bilateral contracts)

6 Day-Before Market Opens nine days before the delivery day and closes of the day before. Each producer states an offer (quantity in kwh and minimum sale price) for each hour of the delivery day Each purchaser states, for each hour of the delivery day a quantity (in kwh) and a maximum purchase price. GME collects purchases and sale offers

7 Demand and supply in the day-before market P* Q*

8 Zone (or node) prices Market and price would be unique in the absence of bottlenecks. If they exist (this depends on the size of energy flows and the distribution of generation) the equilibrium is reached at a local ( zone ) level. The grid is divided into zones. In general, prices are zone prices.

9 As a bottleneck emerges two sections form: - An upstream section (all zones above the neck) which pours energy through the neck -A downstream section (all zones below the neck) receives energy The price in the downstream section is larger than in the upstream to take the congestion into account; this discourages the downstream demand and incentivates building new capacity below the neck. Users pay a National price (PUN) which is a weighted average of local prices.

10 Within-Day Market The Within-Day Market represents an additional flexible instrument.it takes place after the MGP closes and before the MSD opens. The mechanism is similar to MGP, but prices are nodal also for users.

11 Market for Despatching Services (MSD) Here Terna negotiates reserve capacities. Each generator makes an offer of reserve capacity for each hour of the day at some supply price.

12 Non-exchange trades Use of the exchange is non-mandatory and bilateral trades are possible. However, GME must be informed about these, as long as the energy travels on the grid. These trades are reported to the PCE platform (Piattaforma conti energia).

13 MTE (Mercato a termine dell energia) GME also provides a forward market, with continuous exchanges. Again, forward trades are registered on PCE, for despatching purposes.

14 Some International Comparisons

15 Electricity production to GDP 0,0014 0,0012 0,001 0,0008 0,0006 OECD China EU Russia 0,0004 0,0002 0

16 Source: BP Statistical Review 2013 Former USSR 5% Electric Power production 1985 China 4% Russia 10% Other Asia 5% Middle east 2% USA-Canada 32% Former USSR 2% Electric Power production 2012 Other Asia 12% Middle east 4% USA-Canada 22% Africa 2% China 22% EU 14% Central&sout h america 5% OECD Asia 8% Other Europe 4% EU 23% Russia 5% Africa 3% OECD Asia 6% Central&south america 7% Other Europe 3%

17 North America Electric Production by source 2011 Other Renewables 3% Hydro 16% Nuclear Power 17% Source: AEEG Relazione 2012 Fossil Fuels 64%

18 Electric Power Production by source OECD Pacific countries 2011 Other Renewables 3% Hydro 6% Nuclear 16% Fossil Fuels 75% Fonte: AEEG Relazione 2012

19 Electric Power Production by source OECD Europe 2011 Other Renewables 7% IHydro 16% Fossil Fuels 52% Nuclear 25% Fonte: AEEG Relazione 2012

20 Electric Power Production by source Italy 2011 Other Renewables 9% IHYdro 18% Fosisil fuels 73% Fonte: AEEG Relazione 2012