EU’s ACER urges TSOs to increase capacity for cross-border electricity trading
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The European Union Agency for the Cooperation of Energy Regulators (ACER) has highlighted the urgency for TSOs to meet the 2025 obligation of making 70% of transmission capacity available for cross-border electricity trading.
In a recent report, Transmission capacities for cross-zonal trade of electricity and congestion management in the EU, the Agency found that the EU power grid has become increasingly congested with €4 billion ($4.3 billion) spent in 2023 on managing this congestion.
To illustrate, they add that the German system took on 60% of these costs and had to curtail 10TWh of renewables, marking 4% of its total renewable generation.
TSOs are required under EU law to make 70% of transmission capacity available for electricity trading with neighbours by the end of 2025.
However, in the report, ACER found that some TSOs in highly meshed areas of the EU power grid made available, on average, between 30% and 50% of the physical capacity of certain network elements in 2023, thus far from reaching 70%.
According to ACER, maximising transmission capacity is essential for cross-border trade of electricity, as it enables supply and demand to match across the EU. Not limited to the ‘physical’ grid (high voltage lines), this capacity also refers to the transmission capacity that TSOs make available on those lines for trading (‘commercial capacity’) with neighbours.
With the 70% still a ways off, ACER adds that there are still significant benefits from improving how cross-zonal capacity is calculated in the EU, as demonstrated by the introduction of flow-based market coupling in the Core region, which includes England, France and the Netherlands.
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How to meet the 70% minimum requirement?
ACER cites old barriers that persist against meeting the 70% obligation, such as insufficient and costly remedial actions, no mechanism for sharing the cost of remedial actions and how 30% of projects of common interest are delayed. Additionally, some Member States are negatively impacted by loop flows – internal trades within one country that creates electricity flows through another country.
Thus, in their call to action, the Agency recommends a unified approach from Member States.
Specifically, in the report, they list three methods foreseen by EU rules to meet the 70% minimum requirement:
- Implement coordinated processes to first calculate capacity and then manage congestion. Currently, states ACER, grid congestion is assessed mostly at the national level.
- TSOs should optimise and coordinate grid congestion management and moving toward a more regional approach will ensure that the Member States causing loop flows will bear their cost, allowing for more capacity to be made available.
- Undertake targeted grid developments, focusing on the most congested areas of the grid.
Improve the bidding zones configuration: if consistently unable to meet the 70% requirement, better align the bidding zone borders with where structural grid congestion occurs.
In April 2024, ACER alerted the European Parliament and Commission that there is much at stake in not meeting the minimum 70% requirement by the end of 2025 and that there are still significant challenges ahead to do so.
The Agency pointed to the delays in implementing coordinated TSO processes, such as those to efficiently address grid congestion, delays in reinforcing the grid itself and delays in the bidding zone review.
