According to Article 2(2)(c) of the Commission Regulation (EU) 714/2009 on conditions for access to the grid for crossborder exchanges in electricity ‘congestion’ means a situation in which an interconnection linking national transmission networks cannot accommodate all physical flows resulting from international trade requested by market participants, because of a lack of capacity of the interconnectors and/or the national transmission systems concerned.
TSO – DSO Report on an integrated approach to an Active System Management (p. 14, 15) observes that the “concept was generalised afterwards, due to lack of capacity in any element of the grid”, in the Commission Regulation (EU) 2015/1222 establishing a Guideline on Capacity Allocation and Congestion Management (the CACM Regulation).
The CACM Regulation laid down in Article 2 the following definitions:
- ‘market congestion’ - a situation in which the economic surplus for single day-ahead or intraday coupling has been limited by cross-zonal capacity or allocation constraints (Article 2(17));
- ‘physical congestion’ - any network situation where forecasted or realised power flows violate the thermal limits of the elements of the grid and voltage stability or the angle stability limits of the power system (Article 2(18));
- ‘structural congestion’ - congestion in the transmission system that can be unambiguously defined, is predictable, is geographically stable over time and is frequently reoccurring under normal power system conditions (Article 2(19)).
In the European Commission’s Winter Energy Package (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), Article 2(2)(c)) 'congestion' meant a situation in which all requests from market participants to trade between two bidding zones cannot be accommodated because they would significantly affect the physical flows on network elements which cannot accommodate those flows.
Identical definition has been finally included Article 2(4) of the Regulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity (recast).
The definitive text of the recast Regulation introduced, moreover, in Article 2(6) the definition of ‘structural congestion’, which means congestion in the transmission system that is capable of being unambiguously defined, is predictable, is geographically stable over time, and frequently reoccurs under normal electricity system conditions.
The EU Network Code on System Operation in Article 55(c) lists congestion management services among services provided by third parties, through procurement when applicable, that each Transmission System Operator (TSO) uses for ensuring the operational security of its control area.
ACER/CEER Annual Report on the Results of Monitoring the Internal Electricity and Natural Gas Markets in 2017 Electricity Wholesale Markets Volume October 2018 (p. 8) indicates that where sufficient information is available (e.g. in the CWE region), it confirms that congestion most often relates to intra-zonal critical network elements (CNEs) rather than to interconnectors.
ACER/CEER refers to the example, when congestion occurred in the CWE region, internal lines constrained available capacity much more often (86% of occurrences) than cross-zonal lines (14%) in 2017. More than half of these occurrences related to CNEs located inside Germany.
According to the ACER/CEER this shows that capacity calculation methodologies often lack rules to avoid internal exchanges being unduly prioritised over cross-zonal ones.
The amount of congestion in European grids is expected to grow over the coming years "in a large part due to the vast increase of renewable energy sources and the ‘70% rule’ on margin available for cross zonal trade, originating from the Clean Energy Package" (ACER REMIT Quarterly Q1/2021, p. 6).
Gas market congestions
Recitals 21 and 22 of the Regulation (EC) No 715/2009 of the European Parliament and of the Council of 13 July 2009 on conditions for access to the natural gas transmission networks observe that “There is substantial contractual congestion in the gas networks. The congestion-management and capacity-allocation principles for new or newly negotiated contracts are therefore based on the freeing-up of unused capacity by enabling network users to sublet or resell their contracted capacities and the obligation of transmission system operators to offer unused capacity to the market, at least on a day-ahead and interruptible basis. Given the large proportion of existing contracts and the need to create a true level playing field between users of new and existing capacity, those principles should be applied to all contracted capacity, including existing contracts.
Although physical congestion of networks is, at present, rarely a problem in the Community, it may become one in the future. It is important, therefore, to provide the basic principle for the allocation of congested capacity in such circumstances”.
Gas market congestions are governed by the Commission Guidelines on Congestion Management Procedures (‘CMP GL’) - Commission Decision of 24 August 2012 on amending Annex I to Regulation (EC) No 715/2009 of the European Parliament and of the Council on conditions for access to the natural gas transmission networks (2012/490/EU).
The CMP GL Section 2.2 defines four CMP measures to mitigate congestion:
- Oversubscription allows TSOs to offer more firm capacity than is technically available at IPs on the assumption that not all the allocated capacity will be actually used by network users. This scheme provides financial incentives for the TSOs and requires basic modelling built on statistical scenarios.
- FDA UIOLI brings unused firm capacity back to the market on a day-ahead basis. TSOs are not incentivised financially by this CMP. The network user loses its capacity and provides the additional capacity volumes by being subject to re-nomination restrictions.
- Surrender is a CMP measure that allows network users to return their capacity to the TSO. The TSO will again offer this capacity in the primary market (by an auction on a booking platform). Capacity returned by network users will only be sold after the TSO has sold its own available capacity. During the auction, the capacity given back by a network user will not be distinguished from the TSO capacity, and it will be offered based on the standard volume and price units applied in the auctions. The ACER remarks that users could sell their capacity on the secondary market, which might be a faster option in liquid secondary markets, than triggering surrender.
- Long Term (LT) UIOLI is described in Point 2.2.5 of the CMP GL. This mechanism aims at deterring capacity hoarding over the longer term and may not serve as an immediate tool for congestion per the criteria (a) to (d) of Point 2.2.3(1) of the CMP GL. LT UIOLI, nevertheless, plays an important role in the optimal management of transport capacities and dictates that NRAs require their TSOs to fully or partially withdraw systematically underutilised capacity if certain criteria are met. The process could trigger the release of yearly capacity products.