M´ ascaras dise˜ nadas

Elspot is a Day-ahead market on which electricity is traded on a daily basis for physical delivery for the following day.

The bidding areas are consistent with the geographical area of each of the Transmission System Operators: Sweden, Finland and the German area KONTEK are each one bidding area. The grids in Jutland (Western Denmark) and Zealand (Eastern Denmark) are not physically connected giving two bidding areas in Denmark. The Norwegian grid is usually divided into two bidding areas.

Elspot Key Features

• Hourly, Block and Flexible bidding contract (24 hours of the next day)

• Price mechanism to allocate transmission capacity

• Price grid congestion is included in the System Price

• Prices are determined for every hour

• Electronically trading system (EDIEL or EIWeb)

• Minimum contract duration is one (1) hour

x Minimum contract block is four (4) hours duration

• Minimum contract size is 0,1 MWh/h

• Trading currencies: NOK, SEK, DKK, EUR/MWh

• Bid: Sequence price/volume

• Purchases positive numbers, Sales negative numbers

There are different kinds of purchase and sales Bids:

1. Hourly Bid: Participants submit their bids (sale or purchase) covering all the 24 delivery hours. It could be price-dependent hourly bid or price-independent hourly bid.

• Price dependent bids: Nord Pool Spot make a linear interpolation of volumes between each adjacent pair of submitted price steps. Once the Elspot price for each hour is determined, a comparison with a participant's bid form for the day establishes the traded volume for that participant. Price¬ Hour 1 2 3 50 MWh 50 MWh 0 0 -10 MWh -10MWh -30 MWh -30 MWh 4 Etc. Price Levels 22.1 30 30.1 2000 0 15 15.1 22

Table 8. Price dependent schedule

• Price Independent bids: The participant will receive a schedule of deliveries equal to the specified volume for all hours, regardless of the price level within the range.

Floor Price Ceiling Pirnce

0 2000

00-24 60 MWh 60 MWh

Price Hour

Table 9. Price Independent Schedule

2. Block Bid: Is an aggregated bid for several consecutive hours with a fixed price and volume. The Participant can choose the start and stop hour at a block but must consider at least four consecutive hours. The Block Bid gives the opportunity to set a Fill-or-Kill option for all the hours of the block. The maximum blocks bids per day are 15. This kind of bid is useful in cases where the cost of starting and stopping is high.

3. Linked Block Bids: This kind of bid allows to link up to three blocks together, the third bid is then dependent on acceptance of both preceding bids. This is useful when the cost of starting one generator depends if another generator is already in order or not. The blocks cannot link for sale and purchase.

4. Flexible hourly Bid (Only for sales): It is a bid with a fixed price and volume without any specification about the hour. The bid will be accepted in the hour with the highest price in the calculation.

Elspot Timetable

1. At 10:00 the TSOs have had submitted their capacity allocation for Elspot contracts.

2. 12:00 is the deadline hour for receiving all the bids covering hourly contract for delivery the next day. The market closes; Elspot price calculations begin.

3. At 13:00 or 13:30 at the latest the price calculations are completed. The results are confirmed to the participants, to the TSOs and others responsible for power balance adjustments. Participants can file complaints about trades in the next 30 from the publication of the schedules.

4. 14:00 is the deadline for filing complaints, unless a delay of price- setting beyond 13:30 has occurred. All Elspot contracts are binding between buyers, sellers, and Nord Pool Spot.

The Nord Pool calculates the System Price using all the bids submitted by the participant in the four countries + KONTEK area. At first the grid capacities are not included in the calculation, this means that the System Price will correspond to the Price area of each Nordic country.

If congestion is detected during the initial calculation, the markets are split into different price areas and repeat the price calculation in the two areas separately. The

price in one area will therefore be higher than in the other. Electricity will be then purchased in the low price area and sold in the high price area. The increased demand in the low price area will in turn raise the price in that area. Correspondingly, the price in the high price area will fall when the amount of available power increases. This process, known as Market Splitting, will continue until all the transmission capacity is fully utilized.

Elspot Price Analysis

The bar and line chart on figure 9 shows the evolution of the volume traded and the prices at Nord Pool Spot market in Norwegian Krone for the period 1993-1998. In 1996 a significant increase of traded volume is evident since Sweden merged with the Norwegian Spot market, as same in 1998 when Finland joined as well.

0 10 20 30 40 50 60 1993 1994 1995 1996 1997 1998 0,0 50,0 100,0 150,0 200,0 250,0 300,0 E nergy Price NOK/MW TWh

Figure 9. Nord Pool Day-Ahead Spot Market Price/Volume History 1993- 1998 (prices Norwegian Krone)

• The heavily influence of hydraulic in Norway is the reason for the spike prices in 1994 and 1996. Those years where influenced by environmental causes (strong winters and low raining season).

On figure and table 10 is presented the evolution of the volume traded since the beginning of the Nord Pool Spot and Spot prices since 1999, in EUROS. In 1999 and 2000 western Denmark and eastern Denmark respectively join the market. The most recent incorporation to the market was in 2005 when the German area KONTEK

adheres to the Nord Pool Spot Market. The table above shows the evolution in figures and the variation over the years.

0 50 100 150 200 250 300 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 0 10 20 30 40 50 60 E nergy Price TWh _EUR/MWh

Figure 10. Nord Pool Day-Ahead Spot Market Price/Volume History (prices in EUROS)

Table 10. Nord Pool Day-Ahead Prices and volume

Year Price NOK/MWh Volume TW/h 1993 80,3 10,02 1994 182,7 14,8 1995 117,67 20 1996 253,63 40,6 1997 135 43,6 1998 116,35 56,3 Price € /MWh 1999 13,46 75,4 2000 12,8 96,9 2001 23,1 111,9 2002 26,91 124,4 2003 36,7 119 2004 28,92 167 2005 29,33 176 2006 48,59 251

• 2003 was a very dry year, the demand did not grew as much as other years, because of that the prices had an important rise from 26, 91 to 36,7 €MW/h.

• The turnover for Monday 22 January 2007 was 1003.5 GWh. The volume traded at Nord Pool Spot now represents more than 70% of the Nordic consumption.