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6.3.4 MARKET INTEGRATION NEEDS
6.3.4.1 Marginal price
In the economic theory, the supply price to pay increases with the level of demand
to cover. The Marginal price represents the price to pay for supplying the last incre-
ment of demand.
In the TYNDP assessment, Marginal prices are calculated on a country level. The
Marginal prices are a direct output of the optimisation of the EU supply bill in the
modelling
1)
.
The results presented in this section relate to the supply configurations presented in
section 6.3.3.4, including the standardised approach to import prices which
assumes that for any given source this import price is the same whatever the import
point. The results of the marginal price calculation show price convergence between
nearly all countries of Europe (except for Romania which enjoys a lower marginal
price in some years due to its excess of National Production and limited export
capacity). This observation is true for the minimisation and maximisation (i. e. high
and low price) supply configurations.
The results need to be appraised in the view of the modelling assumptions, especial-
ly regarding perfect market functioning, no consideration of actual infrastructure
tariffs, same import price for a given source whatever the import point and standard-
ised price spreads between sources. These assumptions, retained to ensure focus
on the infrastructure limitations, explain that the results are in line with the situation
currently generally observed on the Western markets, but not with the situation on
some other markets.
From an infrastructure perspective, the assessment results show that the infrastruc-
ture in the low infrastructure level does not prevent a price convergence from a
European perspective under the assumptions retained for this assessment. This
should be taken as an indication that progressing towards price convergence at
European level is primarily a matter of full implementation of the Third Energy Pack-
age provisions.
6.3.4.2 Import price spread configuration
The European Commission Quarterly Report, together with other publications,
indicates differences in pricing policies from suppliers towards different countries.
Based on this observation, the Import price spread configuration has been
introduced in this edition of the TYNDP as a complement to the standardised supply
configurations approach referred to earlier in this chapter. It uses different supply
prices on different supply routes for the same supply source and analyses the result-
ing effects on the marginal price of countries (also see Annex F).
The analysis is based on an initial situation derived from actual market data that
could be found in the COMEXT data base
2)
for the first quarter 2016. The German
border price is used as a reference to calculate the spreads listed in table 6.5. For
example, the spread of 2.90€/MWh for Slovakia results from the Slovakian border
price being 2.90€/MWh higher than the German border price in the COMEXT data
base for the first quarter 2016. All import routes not listed are considered as having
a spread of zero: the same price assumption retained is the same as in the balanced
supply configuration.
1) The marginal price is the dual value of the linear optimisation performed in the modelling. See Annex F for more infor-
mation.
2) Use of the European Border Price (EBP) information from the COMEXT database. This database is used as input in the
European Commission Quarterly reports