ACER Virtual Hub Simulator Insights
Explore ACER's online virtual hub simulator for Continental Europe, Ireland, Nordic, and Baltic regions. Learn about the methodology, correlations between day-ahead prices, and the construction of Virtual Trading Hubs (VTH) based on consumption and generation weights. Discover indicative findings for Core VTH and Nordic/Baltic VTH, along with general considerations and stakeholder comments on pricing correlations.
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Presentation Transcript
ACER virtual hub simulator On 10 January ACER published online virtual hub simulator One simulator for Continental Europe + Ireland One simulator for Nordic + Baltic region Methodology explained in the introductory page: Analysis of correlations between day-ahead prices, legal basis in Article 30.4.a of the FCA Regulation VTH constructed with weighted average DA price of underlying zones Core VTH: weights based on consumption (zones generally well balanced) Nordic VTH: weights based on consumption + generation (because of imbalanced zones) Weights: for year Y we use average annual consumption/generation in years Y-2 to Y-4. Analysed period 2021-2024, before 2021 SDAC was not completed yet on many borders Even if BZ is not included in VTH, it can still offer FTRs towards VTH. 1
ACER virtual hub simulator Analysis Construct VTH with different underlying bidding zones Calculate correlations of each included and excluded zone with the VTH Compare computed correlations with reference hubs: Germany for Continental Europe Nordic system price for Nordic + Baltic region General considerations: VTH should include well correlated zones (electrically well connected) Including poorly correlated zone into VTH may improve the correlation for that zone, but worsen correlation for all others A careful balance to be found between usefulness of the VTH vs increasing correlations for all zones 2
ACER virtual hub simulator Indicative findings for Core VTH Basic Core VTH offers better correlations (up to 0.06) than DE for most bidding zones except DE. Only marginal improvement for NL, CZ. PL is specific case due to export/import limits Including SWE, SEE, IE, slightly worsens VTH correlations for Core BZs Indicative findings for Nordic/Baltic VTH VTH offers better correlations (up to 0.07) for Nordic BZ and significantly better correlations (up to 0.11) for Finland and Baltic BZs Northern BZs with predominant generation have slightly worse correlations (up to -0.03). Including Baltic BZs in the VTH is making the differences larger (better for demand zones, slightly worse for generation zones) Correlations will be improved by Nordic FB MC. 3
ACER virtual hub simulator General comments Some stakeholders contest the use of DA prices and forward prices should be used instead In principle correlations of DA and forward prices should show the same relative relationships Forward prices can also be used, but most of the published prices have no trades behind Administrative prices can explain 100% RO-DE forward price correlation ACER also did the correlations between monthly averages of DA prices: correlation values change, but relative differences remain, general conclusions are still valid. Caveats: VTH also depend on weights, different weights lead to different correlations, Much more analysis is needed with larger set of data and different weights or aggregation methods VTH simulator does not aim to pre-empt FCA 2.0 legal adoption process, only aims to inform it 4
