Application of an allocation process of cross-zonal capacity

What is it about?

Two or more TSOs exchanging balancing capacity need to ensure the overall availability of the cross-zonal capacity for the exchange of balancing capacity. This can be done through the allocation of cross-zonal capacity for the exchange of balancing capacity or for sharing of reserves.

There are three different processes for allocating cross-zonal capacity:

• co-optimised allocation process (Article 40)

• market-based allocation process (Article 41)

• allocation process based on economic efficiency analysis (Article 42).

If TSOs opt for applying one of these processes, they need to further specify the relevant bidding zone borders, the timeframe and the duration of the application of the respective methodology.

Legal basis: Article 38(1) of the EB Regulation

Responsibility: two or more TSOs are allowed to apply the methodology for cross-zonal capacity allocation process for the exchange of balancing capacity or sharing of reserves.

Current status: The proposal for the application of the methodology  from frequency restoration reserves with automatic activation submitted by the TSOs of Denmark, Finland and Sweden was approved by ACER in August 2020.The proposal for the application of the methodology for frequency containment reserves and frequency restoration reserves for the Baltic capacity calculation region (Baltic balancing capacity market), submitted by the TSOs of Estonia, Latvia and Lithuania, was approved by the Baltic regulatory authorities in February 2024.

Implementation: The methodology for the Nordic capacity calculation region has been implemented with the go-live of the capacity calculation methodology, according to the CACM Regulation. The methodology for the Baltic capacity calculation region will be implemented once the capacity calculation methodology for the Baltic capacity calculation region is applied according to the CACM Regulation.

Read more on the latest approved proposals for the application of a methodology for a cross-zonal capacity allocation process for the exchange of balancing capacity or sharing of reserves.

Documentation on the approval process of these proposals.

Harmonisation of the methodology for allocating cross-zonal capacity for the exchange of balancing capacity or sharing of reserves

What is it about?

This methodology provides a harmonised approach for the processes of allocating cross-zonal capacity for the exchange of balancing capacity or sharing of reserves, which can be applied by any group of TSOs.

The methodology fosters the optimisation of the allocation process and concerns the co-optimised and the market-based allocation process (Article 40 and 41 of the EB Regulation).

The methodology will replace the regional methodologies for allocating cross-zonal capacity to the balancing timeframe.

Legal basis: Article 38(3) of the EB Regulation

Responsibility: all TSOs

Current status: The harmonised cross-zonal capacity allocation methodology was approved by ACER in July 2023. A proposal for amendment was submitted by TSOs on 31 July 2024. After consulting with stakeholders, ACER reviewed the TSOs’ proposal and adopted the amended methodology on 29 January 2025 (Decision 01-2025).

Implementation: The harmonised market-based process is expected to be fully implemented by September 2027 at the earliest. The implementation deadline of the co-optimised allocation process is defined in the single day-ahead coupling algorithm methodology (Article 37 of the Capacity Allocation and Congestion Management Regulation).

Access the latest approved methodology for harmonising processes for allocating cross-zonal capacity for the exchange of balancing capacity or sharing of reserves.

Documentation on the approval process of this methodology:

• TSO proposal for the harmonised methodology for cross-zonal capacity allocation for the exchange of balancing capacity or sharing of reserves (16 December 2022);
• TSO proposal for the Regional Coordination Centres' (RCCs') tasks of regional sizing of reserve capacity (17 March 2023); 
• TSO proposal for the RCCs' tasks of facilitating the procurement of electricity balancing capacity (17 March 2023)
• ACER Decision No 11-2023 on the TSOs’ proposal for the harmonised cross-zonal capacity allocation methodology (19 July 2023);
• ACER Decision No 12-2023 on the Regional Coordination Centre Regional Sizing of Reserve Capacity Methodology (19 July 2023); and
• ACER Decision No 13-2023 on the Regional Coordination Centre Regional Procurement of Balancing Capacity Methodology (19 July 2023).
• TSO proposal for the amendment of the harmonised methodology for cross-zonal capacity allocation for the exchange of balancing capacity or sharing of reserves (31 July 2024).
• ACER Decision 01-2025 on the amendment to the harmonised cross-zonal capacity allocation methodology (29 January 2025).

Methodology for a co-optimised allocation process of cross-zonal capacity

What is it about?

The co-optimised allocation process is based on a comparison of actual market values of cross-zonal capacity for the exchange of energy and of balancing capacity or sharing of reserves. Its methodology describes the associated rules for allocating cross-zonal capacity across timeframes.

The market values is based on the bids of market participants, submitted for day-ahead energy and balancing capacity markets.

The cross-zonal capacity will be allocated across the balancing and day-ahead timeframe to maximise the combined overall welfare gains.

Legal basis: Article 40(1) of the EB Regulation

Responsibility: all TSOs

Current status: The methodology for a co-optimised allocation process was approved by ACER in June 2020.

Implementation: The implementation is on-going.

All TSOs are currently conducting an impact assessment for the implementation of the co-optimised allocation process and will provide the relevant requirements for the singe day-ahead coupling algorithm to Nominated Electricity Market Operators (NEMOs).

NEMOs need to consider this implementation when submitting amendments of the single day-ahead coupling algorithm methodology (Article 37 of the Capacity Allocation and Congestion Management Regulation).

Read more on the latest approved methodology for a co-optimised allocation process.

Documentation on the approval process of this methodology.

Methodology for a market-based allocation process of cross-zonal capacity

What is it about?

The market-based allocation process is based on a comparison of market values of cross-zonal capacity for the day-ahead and  balancing timeframe. Its methodology establishes the rules for allocating cross-zonal capacity for the exchange of balancing capacity or sharing of reserves.

While one of the two market values is based on the bids of market participants, the second one is based on a forecast. The cross-zonal capacity is then allocated across the balancing and energy timeframe with the aim of maximising the expected combined overall welfare gains.

Legal basis: Article 41(1) of the EB Regulation

Responsibility: all TSOs in each capacity calculation region

Current status: Methodologies for a market-based allocation process were approved for the Baltic, Core, GRIT, Italy North and Nordic capacity calculation regions.

Implementation: Different regions have different implementation timelines. Some regions have already implemented the methodology, whereas some other are expected to do so by 2025.

Read more on the latest approved methodologies for a market-based allocation process of the respective capacity calculation region.

Documentation on the approval processes of the methodologies for a market-based allocation process of each capacity calculation region.

Methodology for an allocation process of cross-zonal capacity based on economic efficiency analysis

What is it about?

The allocation process is based on a comparison of forecasted market values of cross-zonal capacity for the exchange of energy,  balancing capacity or sharing of reserves. Its methodology describes the rules for allocating cross-zonal capacity across timeframes.

The cross-zonal capacity will be allocated across the balancing and energy timeframe to maximise the expected combined overall welfare gains.

Legal basis: Article 42(1) of the EB Regulation

Responsibility: all TSOs in each capacity calculation region

Current status: Methodologies were submitted for the Core, Greece-Italy (GRIT) and Italy North capacity calculation regions.  Core and Italy North were withdrawn during the approval process, while GRIT was approved.

Implementation: No implementation is foreseen.

Read more on the latest approved methodologies for a market-based allocation process of the respective capacity calculation region.

Documentation on the approval processes of the methodologies for a market-based allocation process of each capacity calculation region.

Rules and processes for the exchange and procurement of balancing capacity

What is it about?

Transmission System Operators (TSOs) procure the balancing capacity needed at national level. However, to lower the procurement costs, TSOs may opt for exchanging balancing capacity with other TSO(s).

In this case, TSOs  need to develop the rules and processes for the common procurement of balancing capacity, including the specification of the standard product(s) for balancing capacity (Article 25(2)) they intend to exchange, taking into account the available cross-zonal capacity (Article 38(1)) and the operational limits.

Legal basis: Article 33(1) and Article 34(1) of the Electricity Balancing Regulation

Responsibility: two or more TSOs exchanging or mutually willing to exchange balancing capacity

Current status: So far three groups of TSOs have developed rules and processes for the exchange and procurement of balancing capacity:

• The Frequency Containment Reserves (FCR Cooperation), together with the exemption for transferring the balancing capacity obligations, were approved by the regulatory authorities of Austria, Belgium, France, Germany, Denmark and The Netherlands in December 2018

• The Frequency Restoration Reserves with automatic activation (Nordic aFRR market), together with the exemption for transferring the balancing capacity obligations submitted by the TSOs of Denmark, Finland and Sweden, was approved by ACER in August 2020.

• The Frequency Containment Reserves and Frequency Restoration Reserves for the Baltic capacity calculation region (Baltic balancing capacity market), submitted by the TSOs of Estonia, Latvia and Lithuania, was approved by the Baltic regulatory authorities in February 2024.

Implementation: The FCR Cooperation is operational and expanding. The common rules and processes for the Nordic aFRR market have been implemented with the go-live of the capacity calculation methodology for the Nordic capacity calculation region, according to the CACM Regulation. The common rules and process for the Baltic balancing capacity market will be implemented once the capacity calculation methodology for the Baltic capacity calculation region is applied according to the CACM Regulation.

Read more on the latest approved rules and processes for the exchange and procurement of balancing capacity.

Documentation on the approval process of these methodologies.

Standard products for balancing capacity

What is it about?

Each TSO may develop specific products for its national procurement of balancing capacity. However, when two or more TSOs exchange balancing capacity, they are required to use standard balancing capacity products from a list developed by all TSOs.

This list defines the characteristics of the standard products for each type of reserve:

• Replacement reserves

• Frequency restoration reserves with manual activation

• Frequency restoration reserves with automatic activation, including the validity period and the minimum duration between the end of deactivation period and the following activation.

Legal basis: Article 25(2) of the EB Regulation

Responsibility: all TSOs

Current status: The list of standard products for balancing capacity was approved by ACER in June 2020.

Implementation: Each TSO intending to use standard balancing capacity products should implement this methodology by December 2021.

Read more on the latest approved list of standard products for balancing capacity.

Documentation on the approval process of this methodology.

The development of the EB Regulation started in 2011 when the Agency started developing the Framework Guidelines on Electricity Balancing. These Framework Guidelines were adopted on 18 September 2012.   

Among other elements, the Framework Guidelines included provisions for the forthcoming development of the Network Code on Electricity Balancing. The Framework Guidelines were essentially aiming for the integration of national electricity balancing markets through the cross-border exchanges of balancing services.

The core element of the Framework Guidelines were the models for cross-border exchanges of balancing energy that should first emerge in different geographical areas and gradually, i.e. within 6 years be integrated into one European platform where all TSOs would have access to different types of balancing energy while taking into account the transmission capacities available between different areas. To enable the creation of such a market, several requirements need to be implemented such as a common set of rights (in particular in terms of access to the balancing markets and in terms of remuneration) and obligations (in particular in terms of balancing responsibility) for all types of market participants (generation and demand). The Framework Guidelines also asked for more efficient procurement and use of balancing reserves.

The Framework Guidelines on Electricity Balancing also required the standardisation and harmonisation of some key balancing elements such as balancing products, balancing energy pricing and imbalance pricing, which are considered as prerequisites before the markets can be fully integrated. The roles and responsibilities of TSOs, Balancing Service Providers and Balance Responsible Parties also need to be harmonised to a large degree to achieve a level playing field for competition in different Member States.

Based on these Framework Guidelines, ENTSO-E was tasked to develop the Network Code on Electricity Balancing. Subsequently, the draft network code was submitted to the Agency for opinion based on which ENTSO-E revised the network code and resubmitted it to the Agency. Finally, the Agency adopted a recommendation to the European Commission to adopt the Network Code on Electricity Balancing subject to specific amendments proposed by the Agency. Following this recommendation, the European Commission further revised the network code, which was then finally adopted as a Commission guideline in November 2017 and entered into force in December 2017.

The detailed dates and documents of the above actions are presented below:

Action 1: 18 September 2012: The Agency adopts the Framework Guidelines on Electricity Balancing

Action 2: 23 December 2013: ENTSO-E submits the Network Code on Electricity Balancing to the Agency

Action 3: 21 March 2014: The Agency adopts the Opinion on the Network Code on Electricity Balancing

Action 4: 16 September 2014: ENTSO-E submits the revised Network Code on Electricity Balancing to the Agency     

Action 5: 20 July 2015: The Agency adopts the Recommendation on the Network Code on Electricity Balancing

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​​​​​Development and amendments to CACM Regulation

​

The CAC​​​M Regulation has been developed in close cooperation with the Agency, ENTSO-E and stakeholders, in order to adopt effective, balanced and proportionate rules in a transparent and participative manner. In accordance with Article 18(3) of Regulation (EC) No 714/2009, the Commission will consult the Agency, ENTSO-E and other relevant stakeholders, before proposing any amendment to this regulation.

Development of terms and conditions or methodologies

Every proposal for the terms and conditions on methodologies, having a direct effect on stakeholders, should be submitted to public consultation before its submission for regulatory approval, in accordance with Article 12 of the CACM Regulation. The entities responsible for performing the consultation should duly consider the views of stakeholders resulting from the consultation, prior to its submission for regulatory approval. In all cases, a clear and robust justification for including or not the views resulting from the consultation should be developed and published in a timely manner before or simultaneously with the publication of the respective proposal.​
 

Implementation of CACM Regulation

Pursuant to Article 11 of the CACM Regulation, the Agency, in close cooperation with ENTSO-E, has established the Market European Stakeholder Committee (MESC), in order to organise stakeholder involvement regarding single day-ahead and intraday coupling and other aspects of the implementation of the CACM Regulation and holds regular meetings with stakeholders to identify problems and propose improvements notably related to the operation and development of the issues described in the CACM Regulation.

Details on the activities of MESC​
 

​​​​​​The CACM Regulation sets out specific obligations for NEMOs, TSOs, regulatory authorities and the Agency regarding the development and approval of different terms and conditions or methodologies, which are considered as detailed rules for the operation of Internal Electricity Market in the day-ahead and intraday timeframe. Article 9 of CACM Regulation describes the process of adoption of these terms and conditions or methodologies. In accordance with Article 9(6) of CACM Regulation these terms and conditions or methodologies are divided into European, regional and national. They are developed either by TSOs or NEMOs and in specific cases the cooperation of both is required. A proposal from NEMOs or TSOs should typically be consulted upon in accordance with Article 12 of CACM Regulation and submitted to the concerned regulatory authorities and to the Agency in accordance Article 9(9) of CACM Regulation. The proposal should contain a timescale for implementation and the expected impact on the objectives of the CACM Regulation (Article 3).

Regulation (EC) No 713/2009 has been repealed and replaced by the Regulation (EU) 2019/942 of 5 June 2019 and amends some procedures established by either Regulation (EC) 713/2009 or Regulation (EC) 714/2009.

The ‘old’ proc​edure for adoption of the terms and conditions or methodologies (before 4 July 2019) now applies for only regional and national decision making processes:

The concerned regulatory authorities should take decisions concerning the proposed terms and conditions or methodologies from NEMOs and/or TSOs within six months after the receipt of the proposal. Where the regulatory authorities are not able to approve the proposal, they can request an amendment, which gives the concerned NEMOs or TSOs two months for amending the proposal. Subsequently the regulatory authorities need to approve the amended proposal within two months after receiving the amended proposal. If the regulatory authorities are not able to reach an agreement or upon their joint request, the Agency becomes competent to adopt a decision on the proposal within six months from the referral.

The ‘new’ procedure (after 4 July 2019) now applies for only those terms and condition or methodologies, which are subject to approval by all regulatory authorities, in accordance to Article 9(6) of the CACM Regulation:

The Agency should take decisions concerning the proposed terms and conditions or methodologies from NEMOs and/or TSOs within six months after the receipt of the proposal.

To enable a regular review of the terms and conditions or methodologies, the TSOs or NEMOs responsible for developing these terms and conditions or methodologies may propose amendments to them and submit them for approval to regulatory authorities  or the Agency, respectively.

For the designatio​n of NEMOs and reviewing the existing bidding zone configuration, different rules and procedures apply and are described in more detail in pages​ Designation of NEMOs and Bidding zone​ review.​​​
 

​​​​​Coordination of redispatching and countertrading

What is it about?

The methodology describes how TSOs and regional coordination centres of capacity calculation regions manage network congestions at the day-ahead and intraday level. This is done with regionally coordinated application of costly remedial actions, in the so-called ROSC (Regional Operational Security Coordination) process.

This coordination process involves the remedial actions optimisation and coordination in a single day-ahead and multiple intraday operational security assessment rounds (CROSA).

The methodology is closely related with the Regional Operation Security Coordination (ROSC) methodology (Article 76 of the Guideline on Electricity Transmission System Operation).

Legal basis: Article 35 of the CACM Regulation

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

Current status: The methodology was approved in all capacity calculation regions.

Implementation: The methodology is currently being implemented in most of the regions and expected to be fully implemented by the end of 2024.

Read more on the latest approved redispatching and countertrading methodologies of the respective capacity calculation region.

Documentation on the approval processes of the RDCT methodologies of each capacity calculation region.

Cost sharing for coordinated redispatching and countertrading

What is it about?

The methodology establishes the rules TSOs need to follow to determine the different categories of flows (loop, internal, phase shifting transformers, allocated flows) which created network congestions for each capacity calculation region and how the respective costs are shared among TSOs.

The process

• Once resolved in the Regional Operation Security Coordination (ROSC) process by engaging the remedial actions, the polluting flows are mapped accordingly.

• The costs of engaging the costly remedial actions are appointed to the specific TSOs which create the polluting flows.

Legal basis: Article 74 of the CACM Regulation

Responsibility: all TSOs in each capacity calculation region

Current status: The  methodology was approved in all capacity calculation regions except of Italy North.

Implementation: The methodology is currently being implemented in most of the regions along with the redispatching and countertrading methodology. The implementation in all regions is expected by the end of 2024.

Read more on the latest approved RDCT cost sharing methodologies of the respective capacity calculation region.

Documentation on the approval processes of the RDCT cost sharing methodologies of each capacity calculation region.

​Fallback procedures

Pursuant to Article 44 of the CACM Regulation, each TSO in coordination with all the other TSOs in the capacity calculation region, needs to develop a proposal for fallback procedures and submit it to the concerned regulatory authorities for approval and to the Agency for information.

Action 1: By June 2017, all TSOs from each CCR submitted to the concerned regulatory authorities and the Agency the proposals for fallback procedures. The delay in the submission was caused by the delay in the approval of the MCO plan.

Action 2: By December 2017, the regulatory authorities of the CCRs CHANNEL, HANSA, GRIT and IU approved the respective proposals for fallback procedures.

Action 3: By December 2017, the regulatory authorities of the CCRs BALTIC,  CORE, ITALY NORTH, NORDIC, SEE and SWE requested from their TSOs to amend the respective proposals for fallback procedures.

Action 4: By February 2018, the TSOs of the CCRs BALTIC, ITALY NORTH, NORDIC, SEE and SWE submitted to the concerned regulatory authorities and the Agency the respective amended proposals for fallback procedures.

Action 5: By April 2018, the regulatory authorities of the CCRs BALTIC, ITALY NORTH, NORDIC, SEE and SWE approved the respective amended proposals for fallback procedures.

Action 6: In March 2018, the regulatory authorities of the CORE CCR referred the amended proposal for fallback procedures to the Agency for a decision in accordance with the procedure set out in Article 9(12) of the CACM Regulation. The reason for the referral was that they were not able to reach an agreement on the amended proposal.

Action 7: By May 2018, the TSOs of CCR CHANNEL submitted to the concerned regulatory authorities and the Agency a proposal for amendment of the fallback procedures.

Action 8: In September 2018, the Agency adopted a decision on the amended proposal for the Core CCR fallback procedures.

Action 9: By December 2018, the regulatory authorities of CCR CHANNEL approved the proposal for amendments for fallback procedures.

Action 10: In October 2020, the TSOs of the Core, GRIT and SEE CCR submitted to their concerned regulatory authorities the amended proposals for the fallback procedures.  

Action 11: In December 2020, the regulatory authorities of GRIT CCR approved the amended proposal for fallback procedures submitted by GRIT TSOs.

Action 12: In December 2020, the regulatory authorities of Core CCR referred the amended proposal for fallback procedures to ACER in accordance with Article 9(11) of the CACM Regulation.​​​

You can find documents related to the above actions here.

You can find the exact dates of the above actions in the implementation table here.

You can find the approved fallback procedures here. ​

Calculation of scheduled exchanges

Pursuant to Articles 43 and 56 of the CACM Regulation, the TSOs which intend to calculate scheduled exchanges resulting from single day ahead coupling and single intraday coupling need to develop a proposal for a methodology for calculation of scheduled exchanges and submit it to all regulatory authorities for approval and to the Agency for information.  

Action 1: By December 2016, the TSOs, which intended to calculate scheduled exchanges, submitted to the concerned regulatory authorities and the Agency the proposal for the methodology for calculating scheduled exchanges.  

Action 2: In September 2017, all regulatory authorities sent a letter to all TSOs requesting that all TSOs should submit to all regulatory authorities the proposal for the methodology for calculation of scheduled exchanges by December 2017.

Action 3: By March 2018, all TSOs submitted to all regulatory authorities and the Agency the proposal for the methodology for calculation of scheduled exchanges.

Action 4: In September 2018, all regulatory authorities requested from all TSOs to amend the proposal for calculation of scheduled exchanges.

Action 5: By December 2018, all TSOs submitted to all regulatory authorities and to the Agency the amended proposal for the methodology for calculation of scheduled exchanges for the day-ahead and intraday timeframes.

Action 6: In February 2019, the chair of the Energy Regulators’ Forum, on behalf of all regulatory authorities, requested the Agency to grant a one-month extension for the regulatory authorities’ decision making regarding the amended proposal for the methodology for calculation of intraday scheduled exchanges, pursuant to Article 8(1) of Regulation (EC) No 713/2009, and in March 2019 the Agency granted the extension.

Action 7: By June 2019, all regulatory authorities approved the amended proposal for the methodology for calculation of day-ahead and intraday scheduled exchanges.

You can find documents related to the above actions here.

You can find the exact dates of the above actions in the implementation table here.

You can find the approved scheduled exchanges methodology here.​

Congestion income distribution

Pursuant to Article 73 of the CACM Regulation, all TSOs need to develop a proposal for a congestion income distribution methodology and submit it to all regulatory authorities for approval and to the Agency for information.

Action 1: By August 2016, all TSOs submitted to all regulatory authorities and the Agency the proposal for congestion income distribution methodology.

Action 2: By February 2017, all regulatory authorities requested from all TSOs to amend the proposal for congestion income distribution methodology.

Action 3: By April 2017, all TSOs submitted to all regulatory authorities and the Agency the amended proposal for congestion income distribution methodology.

Action 4: In June 2017, all regulatory authorities referred the amended proposal for congestion income distribution methodology to the Agency for a decision following the procedure set out in Article 9(12) of the CACM Regulation. The reason for the referral was that they were not able to reach an agreement on the proposal.

Action 5: In December 2017, the Agency adopted a decision on the proposal for the congestion income distribution.

The congestion income distribution methodology should be implemented in each respective capacity calculation region at the date of implementation of the capacity calculation methodology in accordance with Articles 20 and 21 of the CACM Regulation.

You can find documents related to the above actions here.

You can find the exact dates of the above actions in the implementation table here.

You can find the approved proposal for the congestion income distribution methodology here.​