Commission de Régulation
de l‟Electricité et du Gaz
Why current capacity calculation
discriminates between European
customers
July 2010
Fonctionnement Technique des Marchés
1
Content
• Illustrative example and general considerations
• Current method of cross-border capacity calculation
in the CWE region
• Objections concerning the existing method
• Proposed capacity calculation method for the CWE
market coupling
• Objections concerning the proposed method
Disclaimer: this presentation only reflects current views of its author and does not
necessarily represent the view of CREG
2
4 nodes - 3 countries example
• Small system:
4 lines & 4 nodes which
are only places for
injecting /taking electricity
• Countries A & C: 1 node
Large country B: 2 nodes
• Physical constraints of the
system:
maximum capacity of
power lines
• Network characteristics:
equal impedances
A
B
1
2
L12
IMAX = 1000
L41
IMAX = 500
L23
IMAX = 2000
C
L34
IMAX = 1000
4
3
PTDF Matrix: node / line
Transactions (node to hub)
1 => 1
2 => 1
3 => 1
4 => 1
0
0
0
0
-0.75
0.25
0.25
0.25
-0.5
-0.5
0.5
0.5
-0.25
-0.25
-0.25
0.75
Line
L12
L23
L34
L41
3
•
General considerations: physical
flows
Flows in network
elements resulting from
exchanges
• Exchange of 100 MW
from node 1 to node 4
(or injection of 100 MW
in 1 and consumption of
100 MW in 4)
• Resulting physical flows:
– 75 MW through line 14
– 25 MW through line 12,
line 23 and line 34
• Kirchhoff laws
Generation: + 100 MW
B
A
1
2
25 MW
75 MW
25 MW
C
25 MW
4
3
Load: - 100 MW
4
• Illustrative example and general
considerations
• Current method of cross-border capacity
calculation in the CWE region
• Objections concerning the existing method
• Proposed method for the CWE market
coupling
• Objections concerning the proposed method
5
XB Capacity calculation*

2-step process:


Determination of the physical flows present in
the transmission network and pre-existing to the
cross-border allocation process. This starting
point is also called the “base case”
Determination of remaining available crossborder capacities
* typically at the French-Belgian border
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Capacity calculation: first step: base case
• Suppose internal
exchange of 1333 MW
from node 2 to node 3,
internal to country B
• physical laws cause flow:
– 1000 MW in line 23
– 333 MW (loop-flow) in lines
21, 14 and 43
• Information on the base
case are exchanged
between TSOs
1333 MW
A
B
1
2
L14 MAX = 500
1000 MW
333 MW
C
4
3
1333 MW
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Capacity calculation: second step: bilateral
ATC
• ATC from country A to
country C
• Remaining capacity on
line 14 :
500 – 333 = 167 MW
• ATC from A to C :
167/0.75 = 223 MW
• In line 14:
– 333 MW from the base
case
– 167 MW from possible
cross border exchange
– Total 500 MW = maximum
capacity of the line
Max: 223 MW
A
B
223 MW
1
2
loopflow: 333 MW
C
4
3
Max 223 MW
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Capacity calculation: precongested case
• Suppose internal
exchange of 2000 MW
from node 2 to node 3,
internal to country B
• physical laws cause flow:
– 1500 MW in line 23
– 500 MW (loop-flow) in lines
21, 14 and 43
• Congestion on the 14 line
2000 MW
A
B
2
1
L14 MAX = 500
1500 MW
500 MW
C
4
3
2000 MW
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• Illustrative example and general
considerations
• Current method of cross-border capacity
calculation in the CWE region
• Objections concerning the current method
• Proposed method for the CWE market
coupling
• Objections concerning the proposed method
10
TSOs limit available CB capacity in favour of
internal exchanges
• all loop flows created by internal exchanges
are accepted and receive full priority
• the choice for favouring internal over CB
exchanges is not market based.
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Impact of the method on commercial
transactions
• Base case winter 20092010 (Elia data)
• Each country perfectly
balanced: no cross-border
exchanges
• Loop flows in the base
case:
–
–
–
–
–
N=>B: 1966 MW
B=> F: 1966 MW
G=> F: 125 MW
S=> G: 2556 MW
F=>S: 19 MW
Without cross-border exchanges, we already
have cross-border flows of nearly 2000 MW!
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Commercial transaction capacity
decreases over time
2008
2007
2006
Average NTC Average NTC Average NTC
Belgium - France
898
1,001
1,130
France - Belgium
2,532
2,575
2,639
Belgium - The Netherlands
1,344
1,316
1,263
The Netherlands - Belgium
1,350
1,333
1,322
France - Germany
1,965
1,568
1,477
Germany - France
3,340
4,373
4,565
Germany - The Netherlands
2,268
2,239
N.A.
The Netherlands - Germany
2,436
2,386
N.A.
Source: first CWE Regional monitoring report
Notwithstanding increase in interconnection capacity
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Impact felt during summer months
•
Around 25% of the time (718 hours), only 600 MW
commercial capacity (NTC) was made available to the
market on the border B-F (in 2009).

During the same period, the border was congested
approximately 44% of the time (1300 hours).

The available commercial capacity stands in shrill contrast
with the available physical capacity -- 5000 MW per border
and 3400 MW in N-1 situation.
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Preliminary legal concerns
•
Current approach discriminates de facto between
customers in Europe.
•
It affects the prices of bidding zones when the
calculation method causes congestion or contributes
to it.

leads to artificial market segmentation

hinders free movement of goods
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Preliminary legal concerns
•
The current calculation method contains various
infringements on EC law:
•
Art. 101 TFEU – restrictive agreements on competition
•
Art. 102 TFEU – abuse of a dominant position
•
Art. 18 TFEU – prohibition on discrimination on the basis of
nationality
•
Art. 35 TFEU – free movement of goods : prohibition on
quantitative restrictions on export
•
Art. 16 EU Regulation 714/2009: non-discriminatory market
based solutions which give economic signals
•
Art. 1.7 and 1.8 of the Annex to EU Regulation 714/2009 –
principle of cost-effectiveness and minimisation of negative
impacts on neighbouring countries
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31th August 2009
Proposed level of cross-border capacities do not take/cannot take into account
potential welfare gains=> the method “isolates” transit countries
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• Illustrative example and general
considerations
• Current method of cross-border capacity
calculation in the CWE region
• Objections concerning the existing method
• Proposed method for the CWE market
coupling
• Objections concerning the proposed method
18
Proposed method for the CWE market
coupling
• Basis: existing capacity calculation methods
• B-F and F-G: bilateral ATC calculation
• B-NL and NL-G: convention or agreed capacities
• Plus an additional step: „coordinated reduction‟
• Coordinated check of network security:
• For 2 (both directions) exp 4 (borders) = 16 extreme case situations
(worst case)
• Leading to possible reduction of proposed ATC on borders within
the region (only)
• No reduction of exchanges with other regions or internal
exchanges
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CWE market coupling: risk of discriminatory
treatment of cross-border exchanges
• Common communication of CWE TSOs & Regulators (published
on ERGEG website, CWE RI, 14th RCC):
“The proposed methodology starts from a best estimate of the situation
established in D-2 which takes into account all flows (outside and inside the
region). At D-2, only an adjustment (or reduction) of cross-border capacities
inside the region is considered by this method so that as a result the CWE
cross-border capacities are provided under the given conditions of system
security. Potential reductions of exchanges outside the region are not
accounted for in this method, while such reduction also may have a positive
impact on the security of the network. A limitation of internal exchanges
within each country is also not considered. All three types of exchanges
are adjustable. However, regulators and TSOs note that cross border
exchanges are currently treated as the only adjustment parameters,
whereas exchanges internal to a hub and exchanges external to the CWE area
are currently not considered as adjustment parameters.”
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• Illustrative example and general
considerations
• Current method of cross-border capacity
calculation in the CWE region
• Objections concerning the existing method
• Proposed method for the CWE market
coupling
• Objections concerning the proposed method
21
Preliminary legal concerns
• Discrimination is inherent in the description of capacity
calculation method.
• As proposed method is based on current method, it contains
the same concerns as to discrimination and market distortion.
• However, as proposed method exacerbates these negative
effects, the seriousness of the infringements likewise
increase.
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Possible measures in capacity calculation and
congestion management
• According to EC law
– Crossborder within the same region
&
– Crossborder with other region
Should prevail on exchanges internal to one country
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Thank you for your
attention
www.
.be
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Efficiency of phase shifters on loop
flows: July 2009
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