Forward allocation of cross-zonal capacities

Development of methodolgies related to forward capacity allocation

Regional design of long-term transmission rights (LTTRs)

What is it about?

The regional design determines in which form long-term transmission rights (LTTRs)  are offered for allocation per each of the different bidding zone borders in the capacity calculation regions. Long-term transmission rights can be offered as physical transmission rights (with a use-it-or-sell-it principle) or as financial transmission rights (as options or obligations), which can cover different profiles (e.g. base load, peak load) and different long-term time frames (e.g. annual, monthly).

Legal basis: Article 31(3) of the FCA Regulation

Responsibility: all Transmission System Operators (TSOs) in each capacity calculation region

Current status: The regional design of long-term transmission rights was approved in all capacity calculation regions.  Some of them also approved amendments.

Implementation: The regional design of long-term transmission rights is implemented in all capacity calculation regions where long-term transmission rights are allocated. Some changes from recently approved amendments are not implemented yet.

Read more on the latest approved methodologies for regional design of long-term transmission rights of the respective capacity calculation region.

Documentation on the approval processes of this methodology  for each capacity calculation region.

 

Harmonised allocation rules

What is it about?

The harmonised allocation rules apply to all allocations of long-term transmission rights performed in the European Union. These rules provide specifications for the auctioning of long-term transmission rights, including eligibility requirements, provisions on collaterals, use and curtailment of long-term transmission rights, invoicing and payment.

Legal basis: Article 51(1) of the FCA Regulation

Responsibility: all TSOs

Current status: The harmonised allocation rules were first approved by ACER in October 2017, and subsequently amended in 2019, 2021 and 2023.

Implementation: The harmonised allocation rules are implemented. ACER approved the latest amendment in December 2023.

Read more on the latest approved harmonised allocation rules.

Documentation on the approval process of this methodology.

 

Regional or border specific requirements of harmonised allocation rules

What is it about?

The harmonised allocation rules for the long-term transmission rights (LTTRs) can have regional annexes which are mainly addressing the introduction of compensation caps for curtailed LTTRs and other specific provisions per bidding zone border or region.

Legal basis: Article 52(3) of the FCA Regulation

Responsibility: all TSOs in each capacity calculation region

Current status: Regional annexes to the harmonised allocation rules were approved in all regions. In some, amendments were also approved or are currently under approval.

Implementation: Regional annexes to the harmonised allocation rules are implemented.

Read more on the latest approved regional annexes to the harmonised allocation rules of the respective capacity calculation region.

Documentation on the approval processes of the regional annexes to the harmonised allocation rules for each capacity calculation region.

 

Congestion income distribution methodology

What is it about?

The congestion income distribution methodology sets out the rules for collecting and distributing the congestion income on the bidding zone borders from forward capacity allocation and distributing it among the TSOs. It follows the requirements from the methodology for sharing congestion income developed under the CACM Regulation.

Legal basis: Article 57 of the FCA Regulation

Responsibility: all TSOs

Current status: The first congestion income distribution methodology was approved by all regulatory authorities in July 2018. It has been amended once since. The currently approved congestion income distribution methodology addresses only the distribution of congestion income on the bidding zone borders applying coordinated net transfer capacity approach.

Implementation: The implementation is connected with the implementation of the capacity calculation methodology within the respective capacity calculation region (Article 10 of the FCA Regulation). As a result, different regions had different implementation timelines.

Read more on the latest approved congestion income distribution methodology.

Documentation on the approval process of this methodology.

 

Sharing of LTTRs’ firmness and remuneration costs

What is it about?

The methodology for sharing costs incurred to ensure firmness and remuneration of the long-term transmission rights (LTTRs) describes how TSOs spend their congestion income to remunerate the eligible long-term transmission rights ‘holders in case the day-ahead price difference between two bidding zones is positive and in the direction of the long-term transmission right. Moreover, it describes the sharing of compensation costs in case of long- term transmission rights‘ curtailment prior the day-ahead firmness deadline (due to operational security) and after the same deadline (due to force majeure or an emergency situation).

Legal basis: Article 61(3) of the FCA Regulation

Responsibility: all TSOs

Current status: The methodology was approved by ACER in October 2020. There is an ongoing amendment process based on the decision of ACER’s Board of Appeal. A new decision was taken by the end of 2021.  

Implementation: The implementation of this methodology is linked to the implementation of the capacity calculation methodology within the respective capacity calculation region (Article 10 of the FCA Regulation).

Read more on the latest approved methodology for sharing costs incurred to ensure firmness and remuneration of long-term transmission rights.

Documentation on the approval process of this methodology.

 

Decision on cross-zonal risk hedging opportunities

What is it about?

The national regulatory authorities on bidding zone borders where no long-term transmission rights are allocated, are required to assess (at least every 4 years) whether the electricity forward market provides sufficient hedging opportunities. If the assessment (including a consultation of market participants and an evaluation of several market indicators) shows that the hedging opportunities are insufficient, the regulatory authorities shall request the TSOs on the respective bidding zone border to issue long-term transmission rights or to ensure sufficient availability of other hedging instruments.

Legal basis: Article 30 of the FCA Regulation

Current status: Find the overview of the existing cross-zonal hedging instruments for all bidding zone borders.

Documentation on the decisions on cross-zonal hedging opportunities.

 

Nomination rules for physical transmission right

What is it about?

These nomination rules describe the entitlement and minimum technical requirements of a physical transmission rights holder to nominate electricity exchange schedules, as well as the description of the nomination process,  timings, format of nomination and communication.

Legal basis: Article 36 of the FCA Regulation

Responsibility: all TSOs issuing physical transmission rights on a bidding zone border

Current status: Nomination rules were approved for all bidding zone borders where physical transmission rights  were issued. In some regions, amendments were also approved or are currently under approval.

An increasing amount of bidding zone borders are issuing long-term transmission rights in the form of financial transmission rights which do not follow these rules.

Read more on the latest approved and currently applicable nomination rules.