KEY MESSAGES/EXECUTIVE SUMMARY
- Eurelectric thanks the Market Coupling Steering Committee for consulting stakeholders
on the R0 report about co-optimisation and looks forward to the continuous involvement
of market participants in the R&D process. - The current electricity market design, based on decentralised dispatch and portfoliobased
bidding, has enabled large welfare gains over the past decade and needs to be
preserved regardless of the solution chosen for the cross-zonal exchange of balancing
capacities.
- Market participants need to remain free to choose which energy and balancing capacity
markets they participate in and how they reflect costs other than the SDAC opportunity
cost in their bidding. - We recall that the additional computational complexity that co-optimisation would
generate must not be compensated by limiting the diversity of bidding products available
to market participants. Any such development would undermine the effective
representation of portfolio constraints in market participants’ bidding and reduce the
overall social welfare. - The R&D on co-optimisation should consider overall welfare impacts, assessing the
potential benefits under realistic market assumptions and highlighting the costs involved
with the collateral impacts on balancing capacity and wholesale markets. - As regards the different aspects developed in the N-Side report, we would like to
emphasise the following:
o Implicit vs. explicit bidding: further investigation is needed before a final choice
can be made between implicit and explicit bidding. We acknowledge that implicit
bidding theoretically relieves market participants from forecasting day-ahead
prices. However, the length of that advantage is not so clear at this stage (cf.
question 8) and Eurelectric believes that the pricing method should be one that
demonstrates greater efficiency, allows portfolio bidding, guarantees bidding
freedom and ensures readable price signals. Furthermore, Eurelectric underlines
that under implicit pricing, it is crucial that MPs remain free to choose all aspects
of their bidding apart from the SDAC opportunity cost in the form of a premium.
o Linked vs. combined bids: we welcome the proposal to enable both linked bids
and combined bids in a co-optimised setting. This goes in the direction of enriching
the product offering in order to allow representing both advanced trading
strategies and the characteristics of specific assets or asset-classes, and to provide
more choices to market participants. It should be noted however that further
enrichment may be required (e.g. combined block bids) and that specific bid
structures must not lead to unit-based bidding.
o Paradoxically accepted bids (PABs): we support the current design choice to
exclude PABs, since their inclusion may impact market transparency. The impact
of this choice on algorithmic performance needs to be closely monitored and the
final choice on such rule needs to be weighed against such performances.