EAC Supply adopts Navitasoft’s Trader Suite

How do you determine the flexibility of an ETRM (Energy Trading and Risk Management) system? The more customer references there are, the better the solution? That may be the case, but a large number of references can also be the sign of a highly standardized product and of less flexibility when it comes to individual customers’ specific needs. A more effective way of measuring system flexibility is checking how varied those references are. Do clients come from various countries with different market types? Do they vary in size and cover small and medium-sized enterprises as well as large companies? If the answer to both these questions is yes, you can be fairly sure that the supplier has a flexible solution.

Despite the term “ETRM” being commonly used by market participants, we at Navitasoft prefer to call our product Trader Suite because it has more to offer than a conventional ETRM system. It not only enables wholesale trade and risk management, but is also capable of supporting retail energy trading activities as well as intraday algo-trading. And we are pleased to say that the biggest power trader in Cyprus is also convinced of these benefits and has decided to implement our solution.

The project

EAC Supply is one of the four core regulated activities of the Electric Authority of Cyprus (EAC) and the largest power portfolio trader of the small Mediterranean island country. To succeed in a soon-to-be competitive market, EAC Supply has contracted us to provide the requisite IT application.

With a budget of over €2 million, the project is made up of a 17-month implementation period and a five-year support and maintenance phase. The microservice-based on-premise license installation will create an ETRM operational system that will enable EAC Supply to be fit for market opening:

• participation in the emerging forwards market in its own right and also representing renewable energy sources (RES) generators
• capturing external RES generation forecasts and sending contract nominations to the market operator
• active participation in the day-ahead market (DAM) with the ability to generate short-term demand forecasts and to send DAM bids to the market operator
• “shadow” settlement validation of transactions with the market operator in the day-ahead market and with forward market counterparties
• communication through an interface with the Cypriot transmission system operator’s market management system (in the roles of market operator and transmission system operator) to support the above activities and to gather a wide range of market information
• modeling the Cypriot energy market via its generation assets, wholesale demand, and forward commodity prices to produce forecasts of DAM prices that support trading decision-making, retail tariff pricing, management accounting, and risk management

As the project manager, Constantinos Varnavas’ words attest, our partners feel just as excited about this collaboration as we do: 

“We are very much looking forward to the cooperation with Navitasoft. Several successful projects all across Europe are a testament to their extensive market knowledge, considerable expertise and leading-edge technology. We are confident that their Trader Suite will enable us to navigate a more complex and more competitive energy market.”

The energy market in Cyprus 

Cyprus is one of the last EU member states to liberalize its energy market, which has some advantages. The country can learn from the mistakes others made during market openings and market liberalization attempts. With the benefit of hindsight, it can implement best practices and choose the model that performs best.

Preceded by a two-month period of industry market trials, the competitive electricity market in Cyprus is expected to start its operation in October 2022. The wholesale market arrangements are largely consistent with the European target model, but there are a couple of important differences: the day-ahead market will have half-hourly periods rather than the hourly periods common elsewhere in Europe, and the intraday market will not be implemented for (at least) the first two years of market operation. 

The new market design arrangements include an over-the-counter forward market, a day-ahead market, and a real-time balancing market. Executed after day-ahead market clearing, an integrated scheduling process will optimize the cost of balancing  energy and operating reserves, procure operating reserves, and aid unit commitment decisions - while complying with system and unit technical requirements.

The role of EAC Supply

As the dominant supplier, EAC is subject to asymmetric regulation and once the country’s new competitive market opens, will be required to buy at least 35% of its energy from the day-ahead market, a regulatory measure to ensure DAM liquidity. EAC Supply is also subject to price regulation, and its retail tariffs need to be approved by the Cyprus Energy Regulatory Authority.

EAC Supply will remain the market representative of RES under national grant plans and - both as a seller and a buyer - will submit forward contract nominations for these renewable energy units. In addition, EAC Supply is the balance responsible party in the wholesale market for these units, which represent approximately 11% of its energy portfolio. 

Net metering and net billing schemes (e.g. for customers with solar photovoltaic panels) are applicable in Cyprus. The prosumers that are currently EAC Supply customers will be free to switch suppliers when the market begins operation in the fall.

Exciting times are ahead of the Cypriot energy market and we are thrilled that our collaboration with EAC Supply will contribute to making it more flexible, more responsive and more efficient.