Energia, il mercato reale alla fine vince sul mercato virtuale
30 June 2010
By Dr. Francesco Lo Passo
In this article, published in the 30 June 2010 edition of Italian business newspaper Milano Finanza, NERA Director Dr. Francesco Lo Passo comments on the draft legislation being discussed at the Italian Parliament, which is proposing to aggregate two zones of the electricity market, Sicily and South Italy, in order to lower electricity price in Sicily.
These two zones are currently split in the day ahead market due to transmission constraints, thereby limiting Sicily's ability to import from the South Italy zone. A new interconnection will be authorized in the near future, which will increase transmission capacity. The draft legislation asks to combine Sicily and the South of Italy in the same zone, in order to create only one price in the day ahead market for the whole area. Congestions will be solved by the TSO in real time. The stated goal is to decrease electricity prices.
However, Dr. Lo Passo argues that the proposed solution will increase the final price of electricity because of the existing physical transmission constraints. Plants in Sicily and South of Italy will offer electricity at a price that will take into account existence of physical transmission constraints; furthermore, the TSO will have to pay constrained off plants that have been contractualized in the day ahead market, and purchase ancillary services from plants located in the import constrained area (i.e., Sicily) in order to grant delivery of electricity.
Dr. Lo Passo contends that the outcome would be opposite to the one envisaged by the draft Law. In addition, the draft legislation would significantly differ from recent international decisions. In a proceeding against Sweden, in fact, the EU Commission and Sweden have agreed to solve congestions by splitting the market in order to preserve price signals.
