|European Union Electricity Market Glossary|
'Cross-zonal capacity' means the capability of the interconnected system to accommodate energy transfer between bidding zones (Article 2(10) of the Regulation 543/2013 of 14 June 2013 on submission and publication of data in electricity markets).
Firmness of allocated cross-zonal capacity is crucial from the perspective of electricity trading.
Current EU legal framework regarding calculation of cross-zonal capacities is predicated on Article 16(3) of the Regulation (EC) No 714/2009 of the European Parliament and of the Council of 13 July 2009 on conditions for access to the network for cross-border exchanges, which reads:
“The maximum capacity of the interconnections and/or the transmission networks affecting cross-zonal flows shall be made available to market participants, complying with safety standards of secure network operation”.
Moreover, Point 1.7 of Annex I to the same Regulation stipulates that Transmission System Operators (TSOs) must not limit interconnection capacity in order to solve congestion inside their own control area.
Another important rule is expressed in Article 21(I)(b)(ii) of the Commission Regulation (EU) 2015/1222 of 24 July 2015 establishing a Guideline on Capacity Allocation and Congestion Management - CACM (Regulation on market coupling), which specifies that capacity calculation and allocation methodologies must be based on “rules for avoiding undue discrimination between internal and cross-zonal exchanges”.
Recommendation of the Agency No 02/2016 of 11 November 2016 on the common capacity calculation and redispatching and countertrading cost-sharing methodologies establishes two high-level capacity calculation principles:
1. limitations on internal network elements should not be considered in cross-zonal capacity calculation methods.
2. the capacity of the cross-zonal network elements considered in the common capacity calculation methodologies should not be reduced in order to accommodate Loop Flows (LFs).
TSOs and National Regulatory Authorities (NRAs) are expected by the ACER to follow these high-level principles when developing, approving, implementing and monitoring their capacity calculation methodologies.
However, the Recommendation allows for deviations from these principles if they are properly justified (from an operational security and socio-economical point of view at the EU level) and do not unduly discriminate against cross-zonal exchanges.
Building on the above approach ACER/CEER Annual Report on the Results of Monitoring the Internal Electricity and Gas Markets in 2016 (Electricity Wholesale Markets Volume, October 2017, p. 21, 22) introduced the concept of ‘benchmark’ capacity, which is defined as the capacity that could be made available to the market if the two high-level principles underlying the Recommendation No 02/2016 were strictly followed.
As deviations from the high-level principles are acceptable subject to adequate justifications, as outlined above, according to ACER and CEER the monitoring of capacity calculation should not only focus on the deviations from the benchmark capacities but also on the proportion of capacity of Critical Network Elements (CNEs) that is made available for cross-border exchanges and the proportion reserved for internal exchanges.
In 2017, two sets of data enabling the ACER to enhance its analysis on cross-zonal capacity calculation, were provided to the ACER for the first time:
1. TSOs provided information on the Common Grid Model (CGM) for continental Europe,
2. the Core (CWE) region TSOs provided via ENTSO-E detailed information on the most relevant data items used in the Flow-Based Capacity Calculation process in the Core (CWE) region (data included, inter alia, hourly information on the forecasted physical flows on internal and cross-zonal transmission lines in the Core (CWE) region resulting from internal exchanges, these forecasted physical flows are used to define the constraints determining the tradable cross-zonal capacity in a flow-based context).
To increase the cross-zonal capacity ACER recommended the full implementation of the principles on cross-zonal capacity calculation included in its Recommendation No 02/2016 i.e.:
- the maximum feasible cross-zonal capacity should be made available to the market rather than the left overs,
- the costs of the remedial actions (e.g. redispatching) needed to guarantee maximum cross-zonal capacity should be fairly shared among TSOs.
Where the use of the available remedial actions is not sufficient to ensure an appropriate level of cross-zonal capacities, or it is found to be ‘too costly’, the Agency recommends that a reconfiguration of bidding zones be applied.
According to the ACER the EU Member States could consider setting a binding target for the availability of existing and future cross-border capacity, e.g. by defining a minimum share of physical cross-zonal capacity which should be made available for cross-zonal trade.
The underlying assumption of the above ACER’s analysis is that if the bidding zones are properly defined according to physical constraints the only factor limiting trade between two bidding zones is the capacity of the network elements on the bidding zone borders (i.e. the interconnection lines).
In order to assign a benchmark capacity value to a specific border, a distinction between HVDC (High-Voltage Direct Current) interconnectors and High-Voltage Alternating Current (HVAC) interconnectors needs to be made.
In the case of HVDC interconnectors, the benchmark capacity is assumed to be equal to the thermal capacity of the interconnector (since HVDC interconnectors are virtually unaffected by the factors that impact available cross-zonal capacity on HVAC interconnectors).
In the case of HVAC interconnectors, there are also other elements limiting the capacity that can be offered to the market.
HVDC interconnectors are not impacted by unscheduled flows (composed of Loop Flows, along with the unscheduled allocated flows (UAFs)).
HVDC interconnectors, moreover, are usually not considered in the N-1 assessment.
In the forward markets perspective, currently, there are multiple cross-zonal allocation rules in the EU to be aligned and implemented by the forward capacity single allocation platform (SAP) based on harmonised allocation rules.
The objective of optimising the allocation of long‐term cross‐zonal capacity is achieved with the Forward Capacity Harmonised Allocation Rules (HAR), hence, the harmonised rules will simplify the trading activities for long‐term products across European borders (Recital 8 of the Annex I to the ACER Decision 03/2017).
Winter Energy Package approach to the cross-zonal capacity calculation
Winter Energy Package (Annex to the Proposal for a Regulation of the European Parliament and of the Council on the internal market for electricity (recast), 30.11.2016, COM(2016) 861 final 2016/0379 (COD)) provides for the coordinated calculation of cross zonal capacities.
This task is entrusted to Regional Operational Centres (ROCs).
According to the aforementioned rules coordinated capacity calculation should be performed:
Coordinated capacity calculation must, moreover, ensure efficient congestion management in accordance with the principles of congestion management defined in the said draft Regulation.
Regulation (EC) No 714/2009 of the European Parliament and of the Council of 13 July 2009 on conditions for access to the network for cross-border exchanges, Article 16(3), Annex I Point 1.7
ACER/CEER, The 6th Annual Report on Monitoring the Electricity and Natural Gas Markets, Main insights ACER/CEER, The 6th Annual Report on Monitoring the Electricity and Natural Gas Markets, Main insights
|Last Updated on Monday, 27 November 2017 22:17|