The Agency for the Cooperation of Energy Regulators (ACER) approved, on 22 December, two proposals from the Transmission System Operators (TSOs), one aimed at amending the congestion income distribution methodology in the European electricity markets, the other at amending the harmonised allocation rules (HAR) for long-term electricity transmission rights.
Congestion income distribution methodology
Congestion income is generated when electricity transmission capacity between different zones is limited, giving rise to congestion and resulting in a price difference between the different bidding zones.
The congestion income distribution methodology needs to be amended, according to ACER, in order to address the financial consequences of non-intuitive flows (which may arise following the introduction of mechanisms such as flow-based allocation or advanced hybrid coupling) and to ensure non-discriminatory treatment of all TSOs.
In addition, in the future, the implementation of the exchange of balancing capacity or the sharing of the reserve will generate congestion income that will have to be distributed. The amendment will therefore regulate how congestion income will be distributed between TSOs.
Harmonised allocation rules for long-term electricity transmission rights
The amendment proposed by the TSOs aims to introduce a flow-based allocation of long-term transmission rights for efficient coordination between zones.
According to ACER, this will make the long-term electricity market more efficient and bring it into line with the design of the day-ahead market.
The flow-based mechanism should enhance cross-border trade, reduce market distortions and ensure accurate price signals that reflect the true cost of generating and transmitting electricity.
In addition, this amendment will enable the implementation of two long-term flow-based capacity calculation and allocation projects in the Core and Nordic capacity calculation regions.
To see the ACER publications: https://aeur.eu/f/aa3 ; https://aeur.eu/f/aa2 (Original version in French by Pauline Denys)