Inter-transmission of Electricity

Cross-border exchanges in electricity

Regulation (EU) 2019/943 on the internal market for electricity

It revises the rules and principles of the internal EU electricity market to ensure it is well-functioning, competitive and undistorted. It also supports the decarbonisation of the EU’s energy sector and the removal of barriers to cross-border trade in electricity.
The regulation is part of the Clean Energy for all Europeans package.

Principles

The regulation set outs a number of principles on which electricity markets should be operated including to:

encourage free price formation and avoid actions which prevent price formation on the basis of supply and demand;
facilitate the development of more flexible generation, sustainable low-carbon generation and more flexible demand;
provide opportunity for consumers to act as market players in the energy market and in the energy transition;
permit the decarbonisation of the electricity system, including making it possible to integrate electricity produced from renewable energy sources and providing incentives for energy efficiency;
provide incentives for investment in production, in particular long-term investment in a low-carbon and sustainable electricity system;
facilitate the progressive removal of obstacles to cross-border flows of electricity between bidding zones* or EU countries and to cross-border transactions on electricity and related service markets;
allow the development of demonstration projects in sustainable, safe and low-carbon energy sources, technologies or systems to be carried out and used for the benefit of society.

Just transition

The European Commission must help EU countries to address the social and economic impacts of the transition to clean energy including by supporting national strategies to reduce the extraction of coal and other solid fossil fuels.

Network access and capacity management

EU countries must take all appropriate measures to remedy congestion*.
Bidding zones should therefore be defined in such a way as to ensure market liquidity, efficient congestion management and overall market efficiency.

The European Network of Transmission System Operators for Electricity should report every 3 years on structural and other major physical congestion within and between bidding areas, including the location and frequency of such congestion.

Any EU countries with an identified structural congestion would then decide, in cooperation with its transmission system operators*, either to establish national or multinational action plans in order to increase cross-border capacity available for trade or to revise or amend its bidding zone configuration.

Capacity mechanism

The regulation set out the conditions under which EU countries could set up capacity mechanisms* and the principles for creating them.

These mechanisms aim to ensure that electricity supply is sufficient during peak periods by remunerating resources for their availability. They should be temporary and designed to address an identified problem of resource adequacy. They should be open to cross-border participation.

A European generation adequacy assessment is introduced to verify if the introduction of capacity mechanisms is justified. EU countries introducing capacity mechanisms also need to notify implementation plans to the Commission to improve market functioning.

An emission limit of 550 g of fossil CO2 per kWh of electricity is put in place. New power plants that emit more than that and start commercial production after the regulation comes into force are no longer able to participate in capacity mechanisms.

Existing power plants emitting more than 550 g of fossil CO2 per kWh and an average of 350 kg of CO2 per year per kW installed will not be able to participate in capacity mechanisms after 1 July 2025.
Capacity contracts concluded before 31 December 2019 are not be affected by the new rules.
Regional coordination centres

These centres support the regional coordination of transmission system operators.
They replace the existing Regional Security Coordinators, but have additional tasks related to system operation, market operation and risk preparedness.
The regulation also creates an EU distribution system operators (DSOs)* entity working in the common interest of the EU.
Repeal

Regulation (EU) 2019/943 repeals Regulation (EC) No 714/2009 (see summary on Cross-border exchanges in electricity) with effect from 31 December 2019.

It applies from 1 January 2020.

Energy union for Europe (Council).

Congestion: a situation in which all requests from market participants to trade between network areas cannot be accommodated because they would significantly affect the physical flows on network elements which cannot accommodate those flows.

Bidding zone: the largest geographical area within which market participants are able to exchange energy without capacity allocation.

Transmission system operator: a person who is responsible for operating and developing the electricity transmission system in an area, and its interconnections with other systems, and for ensuring the long-term ability of the system to meet reasonable demands for the transmission of electricity.

Capacity mechanism: a temporary measure to ensure the achievement of the necessary level of resource adequacy by remunerating resources for their availability, excluding measures relating to ancillary services or congestion management.

Distribution system operator: a person responsible for operating and developing the electricity distribution system in an area, and its interconnections with other systems, and for ensuring the long-term ability of the system to meet reasonable demands for the distribution of electricity.

DOCUMENTS

Regulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity (OJ L 158, 14.6.2019, pp. 54-124)

Regulation (EU) 2019/941 of the European Parliament and of the Council of 5 June 2019 on risk-preparedness in the electricity sector and repealing Directive 2005/89/EC (OJ L 158, 14.6.2019, pp. 1-21)

Regulation (EU) 2019/942 of the European Parliament and of the Council of 5 June 2019 establishing a European Union Agency for the Cooperation of Energy Regulators (OJ L 158, 14.6.2019, pp. 22-53)

Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market for electricity and amending Directive 2012/27/EU (OJ L 158, 14.6.2019, pp. 125-199)

Regulation (EU) 2018/1999 of the European Parliament and of the Council of 11 December 2018 on the Governance of the Energy Union and Climate Action, amending Regulations (EC) No 663/2009 and (EC) No 715/2009 of the European Parliament and of the Council, Directives 94/22/EC, 98/70/EC, 2009/31/EC, 2009/73/EC, 2010/31/EU, 2012/27/EU and 2013/30/EU of the European Parliament and of the Council, Council Directives 2009/119/EC and (EU) 2015/652 and repealing Regulation (EU) No 525/2013 of the European Parliament and of the Council (OJ L 328, 21.12.2018, pp. 1-77)

Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources (OJ L 328, 21.12.2018, pp. 82-209)

Directive (EU) 2018/844 of the European Parliament and of the Council of 30 May 2018 amending Directive 2010/31/EU on the energy performance of buildings and Directive 2012/27/EU on energy efficiency (OJ L 156, 19.6.2018, pp. 75-91)

Directive 2012/27/EU of the European Parliament and of the Council of 25 October 2012 on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC (OJ L 315, 14.11.2012, pp. 1-56)

Successive amendments to Directive 2012/27/EU have been incorporated into the original text. This consolidated version is of documentary value only.

Directive 2010/31/EU of the European Parliament and of the Council of 19 May 2010 on the energy performance of buildings (OJ L 153, 18.6.2010, pp. 13-35)

Electricity in the EU — Inter-Transmission System Operator Compensation (ITC)

Regulation (EU) No 838/2010 — guidelines relating to the inter-transmission system operator compensation mechanism and a common regulatory approach to transmission charging

It aims to provide a mechanism and guidelines for:

compensating electricity transmission system operators (TSOs)* for the cost of hosting cross-border electricity flows on their networks;
how this compensation is calculated.

KEY POINTS

TSOs receive compensation for hosting cross-border flows of electricity on their networks, including for corresponding losses through an Inter-Transmission Compensation (ITC) fund established and administered by the European Network of Transmission System Operators for Electricity (ENTSOE), which was set up under Article 5 of Regulation (EC) No 714/2009. The ITC framework is overseen by the Agency for the Co-operation of Energy Regulators (ACER), set up by Regulation (EC) No 713/2009.

Contribution to the fund

TSOs contribute proportionately to the ITC fund based on electricity flows onto and from their national transmission system.

Participation

Regulatory authorities ensure that TSOs participate in the ITC mechanism and that no additional charges for hosting cross-border flows of electricity are included in charges applied by transmission system operators for access to networks.

TSOs from non-EU countries who apply EU law in the field of electricity or have entered into multi-party agreements are entitled to participate in the ITC mechanism.

Use fee

Each participant in the ITC mechanism charges a transmission system ‘use fee’ on electricity imports and exports of electricity between the national transmission system and the transmission system of a non-EU country, unless it is has agreed to apply EU law in the field of electricity, or where there is no multi-party agreement.

The ‘use fee’ for each year is set by ENTSO-E at the estimated contribution per megawatt hour TSOs from a participating country would make to the ITC Fund based on projected cross-border electricity flows for the relevant year.

Charges

The annual average transmission charges paid by producers is calculated as:

the annual total transmission tariff charges paid by producers divided by the total measured energy injected annually by producers to the transmission system of an EU country.
These charges exclude:

infrastructure charges;
charges paid by producers related to ancillary services;
specific system loss charges paid by producers.
The allowable annual average transmission charges paid by producers is as follows:

Denmark, Sweden and Finland: 0 to 1.2 €/MWh;
Ireland, Great Britain and Northern Ireland: 0 to 2.5 €/MWh;
Romania: 0 to 2.0 €/MWh;
other participating countries: 0 to 0.5 €/MWh.

ENTSO-E monitors how appropriate these allowable charge ranges are, taking account of their impact on transmission capacity financing for EU countries.

BACKGROUND

It has applied since 3 March 2011.

Inter-TSO compensation mechanism (Agency for the Cooperation of Energy Regulators).
Transmission system operator (TSO): a natural or legal person responsible for operating, ensuring the maintenance of and, if necessary, developing the transmission system in a given area and, where applicable, its interconnections with other systems, and for ensuring the long-term ability of the system to meet reasonable demands for the transmission of electricity.

DOCUMENTS

Commission Regulation (EU) No 838/2010 of 23 September 2010 on laying down guidelines relating to the inter-transmission system operator compensation mechanism and a common regulatory approach to transmission charging (OJ L 250, 24.9.2010, pp. 5-11)

Regulation (EC) No 713/2009 of the European Parliament and of the Council of 13 July 2009 establishing an Agency for the Cooperation of Energy Regulators (OJ L 211, 14.8.2009, pp. 1-14)

Amendments to Regulation (EC) No 713/2009 have been incorporated in the original text. This consolidated version is for documentary purposes only.

Regulation (EC) No 714/2009 of the European Parliament and of the Council of 13 July 2009 on conditions for access to the network for cross-border exchanges in electricity and repealing Regulation (EC) No 1228/2003 (OJ L 211, 14.8.2009, pp. 15-35)

Electricity data — generation, transportation and consumption

Regulation (EU) No 543/2013 on the submission and publication of data in electricity markets

It aims to improve the transparency of electricity markets.
It provides for the publication of electricity generation, transportation and consumption data.

KEY POINTS

The regulation requires the European Network of Transmission System Operators for Electricity (the ENTSO for Electricity or ENTSO-E) to set up a central information platform. The platform should be available free of charge to the public.

Bodies responsible for submitting data must submit data on time and of the required quality to allow transmission system operators (TSOs) or other data providers to process and deliver the data on time to the ENTSO-E, so that it can meet its obligations to publish the information.

The ENTSO-E maintains a manual specifying how data is to be standardised and shared, as well as technical and operational criteria and the appropriate classification of electricity production types.

The data to be collected and published fall into the following categories:
total load, i.e. all electricity generated or imported, after deducting any exports and power lost through energy storage
unavailability of a consumption unit (a resource which receives electrical energy for its own use, excluding electricity operators themselves) of 100 MW or more
year-ahead forecast margin, i.e. the difference between the yearly forecast of available generation capacity and the yearly forecast of maximum total load
transmission infrastructure, specifically data on future changes to the network and interconnector projects including expansion or dismantling of transmission grids within the next 3 years, if they have an impact of at least 100 MW on capacity between bidding zones*
unavailability of transmission infrastructure with at least a 100 MW impact on capacity, with an exception protecting the location of sensitive critical infrastructure covered by Article 2 of Council Directive 2008/114/EC
estimation and offer of cross-zonal capacities, i.e. the capability of the interconnected system to allow energy transfer between bidding zones
use of cross-zonal capacities, such as the capacity (in MW) requested by the market or allocated to the market, its price and the auction revenue per border between bidding zones, in accordance with a new schedule including the possibility of real-time reporting
congestion management measures including re-dispatching, countertrading and the costs involved
forecast generation, including generation capacity for all existing production units of 1 MW or more and information about production units (existing and planned) with a capacity of 100 MW or more
unavailability of generation and production units of 100 MW or more
actual generation output (MW) for each generation unit of 100 MW or more installed generation capacity, including actual or estimated wind and solar power generation (MW) and weekly average filling rates of all water reservoir and hydro storage plants (MWh)
balancing, including the rules applied, the procuring processes for different types of balancing reserves and balancing energy, and the amount of balancing reserves under contract (MW) by operators.
It has applied since 5 July 2013 with the exception of Article 4.1 (concerning publication) which has applied since 5 January 2015.

DOCUMENT

Commission Regulation (EU) No 543/2013 of 14 June 2013 on submission and publication of data in electricity markets and amending Annex I to Regulation (EC) No 714/2009 of the European Parliament and of the Council (OJ L 163, 15.6.2013, pp. 1-12)

Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency (OJ L 326, 8.12.2011, pp. 1-16)

Successive amendments to Regulation (EC) No 714/2009 have been incorporated in the basic text. This consolidated version is of documentary value only.

Council Directive 2008/114/EC of 8 December 2008 on the identification and designation of European critical infrastructures and the assessment of the need to improve their protection (OJ L 345, 23.12.2008, pp. 75-82)