Electric power is fundamental to modern life and economic growth. With the everincreasing number of power generators and associated transmission grids spanning regional and national borders, electricity markets continue proliferating across the globe.
The exponential growth of renewable energy resources in particular, with the inherent variability thereof, necessitates a highly dynamic market to ensure optimal least-cost utilisation of available capacity.
We’ve been actively involved in the field of international energy trading in Africa since 2002, and have extensive experience developing and implementing solutions with our Norwegian partners to address numerous market requirements and complexities.
Our Electricity Market Platform is a comprehensive solution, enabling Physical Forward Trading, Day-ahead Trading, Intraday Trading and Balancing Markets, using either an auction-based clearing engine or a matching engine to allow continuous trading. In all circumstances integrated capacity management ensures that no transmission constraints are breached. Users interact with the system in a browser environment, with web-services based integration interfaces to third party systems. The platform has a modular architecture design that can easily be extended to include additional functional components, leveraging off a common set of master data and market operations capabilities, such as transmission network capacity management.
The Master Data Configuration module is integrated as part of the Trading Platform’s system architecture. It configures all required system functions, including:
- Information on the Power Exchange (market operator);
- All trading party related information, e.g. company, trading portfolios, business functions, users, etc.;
- Definition of the transmission network topology and trading areas;
- Definition of market products and time frames;
- Definition of the calendar (trading calendar of when the various markets are cleared).
These configurations are typically time-dependent and are captured with a Valid From/To date. Maintenance of master data occurs on an ad hoc basis and is not part of the daily market operations. Being implemented as flexible configurable data, it allows for easy updates of all fundamental data in the market, offering short time-to-market at a low cost for any required changes.
During the installation process, SQL scripts insert master data and system parameters required to start the Trading Platform in the initial state. The System Administrator then enters the rest of the master data into the system database via web-based user interfaces.
The The Market Operations Interface system module provides all required business functions for the Power Exchange, which is required to ensure the smooth day-to-day operations of all markets. This functionality is common to all the markets and includes:
- Declarations of technically available transmission capacities from the various Transmission System Operators (TSOs);
- Transmission capacity reservation for future markets;
- Registration of bilateral contracts, including contract parameters, wheeling paths and schedules;
- Maximising transmission network utilisation by considering counter flows.
The interface and system menu structure serves the Transmission System Operator, Market Surveillance Officer, System Administrator, Trading Platform Administrator, and other roles. The Trading Platform controls and validates the logged on users and their privileges, depending on the business functions they are required to fulfil.
Trading Interfaces are specific to each of the markets and provide the functionality to view the market results, and submit bids and offers.
Trading is conducted via a trading account. Participating companies have the option to have a single trading account for all markets, or a separate trading account for each of the markets, or even different trading accounts for buying and selling purposes.
User access is controlled for each of the trading accounts, allowing a participating company to assign different traders to the various markets.
The Auction Market Clearing Engine supports both the Day-ahead Market and the Forward Physical Market. It collects all orders and determines a balance price in the intersection between the markets’ aggregated purchase and sales curve. The balance price is valid for all trades.
The module’s algorithm also manages the implicit auction of the market’s available transmission capacity, based on the min cut – max flow theorem in order to maximise the flow and thereby meet its objective function of ‘maximising the social welfare’. If the demand for contractual flow of power exceeds the available transmission capacity for the markets, trade grid congestion occurs and area prices are calculated, where prices in the congested area will be higher than that of the surplus area. This clearing engine is based on the development of the Nordic market and includes 25 years of best practice and experience.
The Continuous Market Matching Engine applies the relevant matching rules to conclude trades in continuous markets. Buy and sell orders are matched after consideration of volumes, prices, the sequence in which orders have been entered (‘first come, first served’ principle) and available transmission capacities. When determining possible transmission paths, all possible combinations of transmission interconnectors, which can potentially enable a trade, are considered.
The Continuous Market Matching Engine supports both the Forward Physical and Intraday Markets.
The Market Settlement Engine facilitates the settlement process of all supported markets (Forward Physical Market, Day-ahead Market and Intraday Market). After price calculation results have been published and the market dispute period has expired, the market results are ready for settlement.
Settlement is executed by a Settlement Manager. All relevant market data is sourced from the various trading modules to the Settlement module.
The Settlement module performs all settlement calculations as traded amounts (and can easily be configured to also do settlement for fees for wheeling and losses, market administration fees, etc.), and publishes the results to the respective companies’ settlement business functions.
Settlement calculations are run daily for all three markets. Settlement statements are published via e-mail, and are also available on the Trading Platform, subject to appropriate access control measures.
The system automatically manages transmission constraints in all trading functions and between defined trading areas, to achieve maximum trading in the overall area, while always respecting transmission constraints.