ACER consults on the harmonised allocation rules for long-term electricity transmission rights
ACER consults on the harmonised allocation rules for long-term electricity transmission rights
What is it about?
On 1 March 2023, ACER received the Transmission System Operators (TSOs) proposal for the amendment of the Harmonised Allocation Rules (HAR) for long-term electricity transmission rights, mainly to allow for their long-term flow-based allocation. ACER launched a public consultation on 29 August 2023 on the amendments to the rules.
Why change the rules?
Cross-zonal capacity is currently allocated in the long-term electricity market with no coordination between different bidding zone borders, causing inefficiencies in some capacity calculation regions. This HAR amendment is needed to introduce the flow-based allocation of long-term transmission rights, enabling cross-zonal coordination. This will make the long-term market more efficient and aligned with the day-ahead market design.
What is the flow-based approach and what are its benefits?
Flow-based allocation of long-term transmission rights is a mechanism that efficiently allocates cross-border transmission capacity in the electricity market. It takes into account the physical reality of the transmission network by calculating the available capacities of physical network elements (so-called Remaining Available Margins) for electricity exchanges between different areas, as well as sensitivity factors (so-called Power Transfer Distribution Factors).
A flow-based mechanism enables cross-zonal coordination in long term electricity markets, leading to better network representation and more accurate price signals for cross-border trade, reducing market distortions and ensuring that the prices reflect the true cost of generating and transmitting electricity.
Amending the rules will allow the implementation of two projects for long-term flow-based capacity calculation and allocation; in the Core and the Nordic capacity calculation regions. The HAR revision is the final step needed for the implementation of these projects, following the approval of the single allocation platform, the congestion income distribution and sharing costs incurred to ensure firmness and remuneration of long-term transmission rights on 22 March 2023.
What are the next steps?
In addition to this proposal, TSOs submitted to ACER their proposal for amending the HAR provisions on collaterals by 1 August 2023.
ACER will decide on both proposals for amending the rules in a single procedure by the end of 2023.
To make an informed decision, ACER runs a public consultation (from 29 August to 26 September 2023) on the amendments to harmonised allocation rules for long-term electricity transmission rights.
Update of 22 December 2023
On 22 December 2023, with its Decision 18/2023, ACER approved the TSOs' proposal to amend the Harmonised Allocation Rules (HAR) for long-term electricity transmission rights.