26.10.2022

ACER reviews the rules on the cross-zonal capacity allocation in the long-term electricity markets

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Electricity pylon and power lines

ACER reviews the rules on the cross-zonal capacity allocation in the long-term electricity markets

What is it about?

Europe’s long-term electricity market relies on so-called long-term transmission rights (LTTRs), which allow market participants to hedge their exposure across bidding zones. The allocation of those LTTRs is currently not coordinated across different borders, which leads to inefficiencies in some capacity calculation regions (CCRs).

To enable the implementation of the long-term flow-based allocation in the Core and Nordic CCRs, and following the all Transmission System Operators’ (TSOs’) proposals, the EU Agency for the Cooperation of Energy Regulators (ACER) is reviewing three proposals for amendments of forward capacity allocation methodologies related to:

  • Single allocation platform, including the methodology for sharing costs for its establishment, development and operation;
  • Congestion income distribution; and
  • Sharing costs incurred to ensure firmness and remuneration of LTTRs.

As part of its review, ACER seeks stakeholder input via:

Why change the rules?

Cross-zonal capacity is currently allocated at the long-term electricity market with no coordination between different borders (i.e. using a flow-based allocation approach), which leads to inefficiencies in some CCRs. The proposed amendments include requirements for flow-based allocation of LTTRs, aiming to make the long-term market more efficient and align it with the day-ahead market design.

In particular, this revision is needed to enable the implementation of two ongoing projects for long-term flow-based capacity calculation and allocation in the Core and the Nordic CCRs.

How does ACER contribute?

ACER will assess the amendments proposed by all TSOs and revise them where necessary in order to ensure their contribution to market integration, non-discrimination, effective competition, proper functioning of the market, and their compliance with the Regulation on the internal market for electricity and the Forward capacity allocation guideline.

What are the next steps?

ACER has six months (until 28 March 2023) to decide on the TSOs’ proposals.

To collect the views of the stakeholders, ACER’s Public Consultation on the TSOs’ proposed amendments runs from 26 October to 23 November 2022.

ACER invites interested stakeholders to register for a Public Workshop, which will take place on 17 November 2022.

Access the Public Notice.