9th Stakeholder Group Meeting of the Gas Regional Initiative North-WestAuctioning of primary capacity: results from the platform TRAC-X primary

Rotterdam, 25 November 2011

Goetz Lincke, MD TRAC-X GmbH

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Agenda

TRAC-X – A Success Story

TRAC-X primary

Conclusions

Back-up: TRAC-X secondary

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TRAC-X

2005

Goetz Lincke

Ulrich Ronnacker

BTC Business Technology Consulting AG

ECG Erdgas Consult GmbH

Founded in

Managing Director

Chairman of the Supervisory Board

IT-Partners

TRAC-X Transport Capacity Exchange European Platforms for Gas Transport Capacities

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9,1%

9,1%

9,1%

9,1%

9,1%9,1%

9,1%

9,1%

9,1%

9,1%

9,1%

TRAC-X Transport Capacity Exchange Shareholders: Then and Now

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2007

2011

TRAC-X corporateCapacity Platforms

TRAC-X primary

August 2011

Primary capacities

TSO transport customer

146

293

AuctionFCFS

DayMonthQuarterYear

TRAC-X secondary

Go-LiveMarch 2005

Secondary capacities

shipper shipper

96

173

AuctionBuy-it-nowSearchKeyed procedure

Long-TermDay-Ahead

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Go-Live

Types of Capacities

Trade between

Registered Shippers

Authorised Users

Trading Formats

Capacity Products

Agenda

TRAC-X corporate – A Success Story

TRAC-X primary

Conclusion

Back up: TRAC-X secondary

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8

08/2010 – 11/2010 Intense consultation of shippers. Result: Redesign of process

09/2010 – Publication of new GasNZV: Decision on start date for TXP (01/08/2010)

03/2011 – Determination on CAM and CGM by BNetzA („Karla“)

08/2010 – Presentation of first TSO-concept für auction- and product design

Major Steps 2010/2011 – TRAC-X primaryRegulation and consultation steps the „short“ way to the CAM

02/2010 – Start of determination process by BNetzA for CAM and CGM

06/2010 – Start of TSO-project for TRAC-X Primary. Focus: auction process

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More than 200 different processes were realised.

TRAC-X is certified a secure web application.

The platform runs stable and can be expanded easily

Well-rehearsed shareholder structure, design & decisision-making processes

Platform goes life in August 2011 as planned.

Major Steps 2011 – TRAC-X primaryFrom New Regulation to fully-fledged Platform within a Year

Product specifications for „primary“ are created by 12 TSOs in 2 ½ months

Implementation of TRAC-X primary in 8 months

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Lessons Learned - TRAC-X primary

Key Learnings from implementing German CAMs on TRAC-X Primary

Very detailed discussion and specification of auction mechanisms at the earliest possible point in time was very useful

Difficulties & complexities of different process variants were evaluated early

Discussions and consultations with market partners and regulation authorities were very profound.

Many important decisions for IT- and process implementation were made early enough (months before final determination by BNetzA)

Highest process complexity raised from bundling and different capacity models among the TSOs

Highest IT complexity raised from interfaces between TSO-backends and TRAC-X primary

Highest project complexity raised from managing and synchronizing 12 TSO-projects, 1 platform project, 7 IT-Suppliers and external stakeholders efficiently

Regulatory risked remained as the new CAM may differ from KARLA-Gas (see next slide)

TRAC-X Primary and CAMTRAC-X has already implemented many CAM requirements* but regulatory risks remain….

Standard Products

TRAC-X(implemented)

CAM(planned)

AllocationMechanism

AlgorithmJ,Q,M

AlgorithmDAC, WID

Bundling

Further Processes

Delta(to be implemented)

New auction mechanismhigh effort, but already

specified in platform documents

No effort

* the comparison is based on the Framework Guidelines CAM by ACER (03 March 2011) and the ENTSOG draft network code on CAM (21 June 2011)

Year, Quarter, Month, Day-Ahead

Firm – AuctionInterruptible – FCFS

Multi-stage, Volume-based with predefined price steps in

x bidding windows (1 per step)

Multi-stage, volume-basedauction with predefined price steps

one bidding window

Implemented for market area interconnections (firm and interr.)

possible for cross-border

Capacity returns, credit limit checks, conversions

balancing group assignments…

Year, Quarter, Month, Day-Ahead, Within-Day

Firm – AuctionInterruptible – Auction

Multi-stage, volume-based predefined price steps (30)

one bidding window

Uniform price Multiple bids per shipper

fill-or-kill

Bundling for cross-border interconnections (firm capacity)

Interruptible = ?

Introduction of an intraday product

low effort

Auctions for interr. capacitylow effort

Firm, TSO-specific bidding curves + 1 bidding window

medium effort

TRAC-X primary offers the following functionalities for all integrated TSOs:

Central registration service of customers and users

Overview of all bookable network points

Auctioning of capacity products

First-committed-first-served bookings with alternatives capacity proposals

Return of unused capacity and display of existing contracts for customers

Validation of credit limits and trading agreements for balancing groups

Additionally, TRAC-X primary supports bundling of entry and exit points of adjacent TSOs

and concurrency situations in the TSOs networks for auctioning.

TRAC-X primaryFunctionalities of TRAC-X primary

TRAC-X primaryLaunch of the Primary Capacity Platform

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tSepAug Oct […]

Start Yearly

AuctionsStart Day-Ahead Auctions

Registration Start

Start FCFS

Booking

Start Monthly Auctions

Start Quarterly

Auctions

Mar Apr

TRAC-X User Congress

Check for Usability Improvements

TRAC-X primaryLaunch of the Primary Capacity Platform

ACTUAL

Since 01/08/2011: Registration all German TSOs

Since 30/08/2011: Quarterly auctions all German TSOs

Since 06/09/2011: FCFS bookings ENID, EWE Netz, Gasunie Dtl. Transport,

ONTRAS, Thyssengas, Statoil Dtl. & WINGAS Transport

Since 13/09/2011: Monthly auctions ENI Dtl, EGMT, EWE Netz, Gasunie Dtl. Transport, GVS Netz, GRTgaz Dtl., ONTRAS, Statoil Dtl., Thyssengas & WINGAS Transport

Since 01/10/2011: FCFS bookings bayernets, EGMT, GVS Netz

Since 04/10/2011: yearly auctions all German TSOs

TARGET

from 01/01/2012: FCFS bookings GRTgaz

from 01/03/2012: monthly auctions Open Grid Europe

from 31/03/2012: day-ahead auctions all German TSOs

from 01/04/2012: FCFS bookings Open Grid Europe14

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TRAC-X primaryStatistical Data on all Auctions since Trading Start

961.04 GWh/h were placed on TRAC-X primary

All in all, 7 TSOs marketed 86.83 GWh/h

703 Products at 52 Network points

44 % of the auctioned capacity was marketed at two network points (Deutschneudorf & Lasow)

35 Auctions at 6 network points ended with a surplus (Emden, Lasow, Vreden, RC Basel, RC Thayngen-Fallentor, Oude Statenzijl)

*all auctions until 24 October 2011

9%

91%

Marketed Capacity

Marketed capacity Unsold capacity

GUD3%

OGE15%

Thyssengas12%

Wingas3%

Ontras44%

Bayernets7%

GVS16%

Marketed Capacity Ratio per TSO

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TRAC-X primaryMarketed Capacities of the TSOs

Ontras: 38.3 GWh/h

GVS: 13.8 GWh/h

OGE: 12.6 GWh/h

Thyssengas: 10.7 GWh/h

Bayernets: 5.6 GWh/h

GUD: 2.9 GWh/h

Wingas: 2.9 GWh/h

*all auctions until 24 October 2011

GUD3%

OGE15%

Thyssengas12%

Wingas3%

Ontras44%

Bayernets7%

GVS16%

Marketed Capacity Ratio per TSO

TRAC-X Primary – Highlights of Technical Architecture

Auction and Booking Modules

Both modules are implemented and maintained by Deutsche Börse Systems

Similar modules are used in highly frequented electricity and commodity market places

Auction algorithm, bidding windows are highly configurable and modular

Interface Architecture

All interfaces between TRAC-X Primary and TSO backend systems are designed as WebServices using open standard techniques (SOAP, XML, S/MIME, HTTPS…)

Interface definitions are standardised among all connected TSOs

Workflow Engine and Process Monitoring

All modules are connected using a central workflow engine (Inubit BPM)

Process executions (Auctions, Bookings, Registrations, …) can be monitored along the complete process chain (Shipper -> Platform Process -> TSO backend -> Platform -> Shipper)

Master Data Synchronisation

Direct Interface to German Code Authority (DVGW) and indirect interfaces to EIC and ILN (via DVGW) synchronised shipper master data on platform and all TSO-systems

Agenda

TRAC-X corporate – A Success Story

TRAC-X primary

Conclusion

Back up: TRAC-X secondary

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TRAC-XConclusion

To realise a successful capacity platform project the following requirements are necessary:

state-of-the-art IT realisation

good collaboration between TSOs, plattform operator and market participants is key

experiences in connecting various TSOs with all their different requirements necessary

Standardised communication & process design with the ability to integrate various backend systems of the several IT-TSO systems essential

Project management is fundamental

TRAC-X has delivered this successfully

Agenda

TRAC-X corporate – A Success Story

TRAC-X primary

Conclusion

Back up: TRAC-X secondary

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TRAC-X secondaryParticipating Network Operators (TSOs)

Long-Term

Day-Ahead

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remark: bayernets will soon join TRAC-X secondary, negotiations are about to be completed

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Placed Capacities Trade Volumes

Long-Term Quantity Trading volume in GWh/h/d

Day-Ahead

Qantity Trading Volume in GWh/h/d

Auction

Buy-it-now

Keyed procedure

Search

Auction

Buy-it-now

Total

440 2733,45

301 866,71

37 12.978,06

148 127.960,63

926 144.538,85

51.474 2.033,64

1.601 56,21

53.075 2.089,84

54.001 146.628,69

39 487,60

24 189,37

21 11.279,55

111 69.478,95

195 81.435,48

7.080 356,52

26 0,71

7.106 357,23

7.301 81.792,71

TRAC-X secondaryTrade Volumes Since Start of Trading

TRAC-X secondaryProject: Further Development of TRAC-X secondary

In cooperation with traders and TSOs extensive changes to TRAC-X secondary are implemented, budgeted and required resources are calculated.

Amongst others this applies to:

Consolidation of the Long-Term and Day-Ahead section by implementing standardised products

Automation of trading processes

- IT-interfaces between TRAC-X secondary and trader

- Automated process-workflows (before, during and after transactions)

Expansion of tradable booking points

Possibility of assigning capacities also for Day-Ahead products

Controversy about transaction fees, to be solved in 2012

Target in 2012: Approximation of TRAC-X secondary and TRAC-X primary

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Dr. Götz LinckeTRAC-X Transport Capacity Exchange GmbHSchillerstrasse 404109 LeipzigPhone: +49 341 355 872-10Fax: +49 341 355 872-99Email: goetz.lincke@trac-x.de