One of the building blocks that indicates maturity of an electricity market is providing an energy exchange environment to increase the liquidity of electricity market. The idea of establishing an energy exchange in Iran rose in 2007. The official opening of the electricity trades was in 2013.
Lots of technical issues should be solved to manage both the energy exchange and electricity market. Beside the development of electricity market in Iran, our experts made great effort to establish the energy exchange. The gate closure for these trades is 3 days before the time of the delivery of the power. For instance, transmission prices could be an obstacle for trading the electricity with the price which should be determined in the energy exchange. Normally, transmission prices results from the real physical power transaction. So, it requires sophisticated methods to make the prices before the physical power transaction. In addition to these technical difficulties, the energy exchange should conform to the existing regulations of other commodity exchange.
The energy hub concept is used in IREMA to facilitate the energy trades for the buyers and sellers within the energy exchange. In fact, the energy hub is where the energy trade takes place. Producers deliver the power at the energy hub to the consumer. It means that the sellers will be charged for the losses and the transmission usage from the point of production to the energy hub. Similarly the consumers will pay for the losses and the transmission charges from the energy hub to the point of consumption. The transmission rates and loss factors are determined using the real power system snapshots,
Currently, 20 generation companies with the nominal power of more than 14800 MW participate in the energy exchange and 39 distribution companies, purchase a portion of their demand in the energy exchange.
In the energy exchange, the trades are the future contracts leading to delivery of power. The buyer and sellers match their bids and offers for a certain quantity of power and the delivery of power will be in the time to come. They are free to make decisions about the prices and there will not be an intervention on their decisions. It should be noted that only the privately owned generation companies have the authority to participate in the energy exchange and sell their power. The maximum power that could be sold in the energy exchange is limited for each power plant. The quantity of power which is sold in the energy exchange will be omitted from the sellers' bidding curves in the day ahead market clearing process. In fact, the portion of the power that has been sold in the energy exchange is considered as the first priority to be allocated to the power plants in the day-ahead market optimization problem. To do so, the bidding price associated to this portion of power is set to zero regardless of the price that has been offered by the power plant. The buyers also will not imposed to pay any additional cost after the day ahead market settlement, for the power that they purchased in the energy exchange.