The material is an excerpt from an article published in the magazine “Energy, electricity perspectives”
Currently, the most significant project in terms of market impact in Bulgaria, in which IBEX has focused its efforts, is the integration of the DAM with Romania. The realistic deadline for completion of this market coupling project is August 2021, due to the technical requirements so-called “Interim Coupling Project” 4M and its delay of more than 8 months caused by major market operators in Europe. It is expected that through the market coupling on Romanian border and with implicit allocation of at least 800 MW cross-border capacity, the liquidity of Bulgarian DAM will increase, facilitating price coupling with market areas of Romania, Hungary, Czech Republic and Slovakia.
If we consider the current status of the Bulgarian power market as a model of an isolated market, then the clearing price of the isolated market is the price of the intersection of the supply and demand curves, ie. it will be the MCP (market clearing price) IBEX price at which demand is exactly equal to supply. Exports and imports from and to the isolated market are carried out by the trading participants through the capacities (Physical Transmission Rights PTR), acquired at explicit (separately organized) auctions.
Imagine the same isolated market ceases to be so and, thanks to a certain level of cross-border NTC capacity, exports take place. In this way the price rises (from MCP IBEX to P1). In the adjacent market area, the price decreased (from MCP to adjacent market area of P2) due to imports. If we extrapolate these dependencies between the price and the corresponding quantities of exports (or imports), then we can construct the so-called “Net import / export curve” (NEC) for the relevant market area. The export market area in the above example will have a lower price P1 than the price in the adjacent area for the respective delivery interval. Thus, the revenue of the exchange operator from the difference in prices between the two zones (P2-P1) is the so-called “congestion rent”, which is the price of the implicitly allocated capacity multiplied by the amount of energy passed between the two bidding zones.
In second and third place among the priorities of IBEX are the projects DAM and IDM coupling the Greek border, which are planned to be take place in March and May 2021, respectively. Despite the possibility of a more successful coupling in shorter term with Greece, the effect on the market will be smaller compared to RO coupling due to the weaker interconnection of the two countries’ electricity systems at the moment and also the limited cross-border capacity between Greece and Italy. Despite the more limited effect, the work continues and the coupling with Greece is expected to happen in March next year.
Sources: Energy, electricity perspectives