The European transmission grids are closely interconnected. The electricity flows are spread according to Ohm's law, including across national borders. The transmission system operators work together to calculate the transmission capacity that will be available to market participants. To do this, they make assumptions about which plants will generate how much electricity and how much of this will be consumed in which locations. Network utilisation forms the basis for determining the transmission capacity available for traders. When performing these calculations, the transmission system operators consider various planning horizons:
Cross-border transmission capacity – long-term
The transmission capacity that is available in the long term is calculated using shared procedures. These form the basis for the annual or monthly rights that traders are able to purchase at auctions. Nowadays, these auctions are mostly conducted by the Joint Allocation Office JAO jao.eu.
Cross-border transmission capacity – short-term ("day ahead")
In Central Western Europe (CWE) acer.europa.eu a joint flow-based procedure that takes account of the utilisation levels of the various grid elements is applied. The transmission system operators in France, the Netherlands, Belgium, Luxembourg, Austria and Germany are very closely interlinked. The relevant information is collated via a central system in order, ultimately, to acquire the maximum possible transmission capacity for the various markets. The entire process respects the constraints set by current technical capabilities and therefore safeguards the continued reliable operation of the system.
Cross-border transmission capacity – "intraday"
The remaining intraday transmission capacity is passed on to the markets via central platforms (e.g. intraday-capacity.com).
Two main methods are used to place capacity in the markets:
In this case, traders participate in an auction to acquire the right to use a certain amount of cross-border transmission capacities for a given period. This method is primarily used to allocate long-term rights, that is to say monthly or annual products. Purchasers can either use the physical capacity themselves or can receive financial compensation for it.
Implicit auctions (market coupling)
In this case, a central unit simultaneously receives information about the local market price (prior to any transfer between the markets) and the transmission capacity between the markets. This central unit transfers electricity between the markets until either the prices are identical or the transmission capacity is exhausted. This method maximises utilisation of transmission capacity and is primarily used for short-term transactions (day ahead and intraday). The method permits the best possible alignment of prices between the markets.
Groups in Europe
In Europe, there are groups with regional responsibilities that ensure optimum capacity calculations and capacity allocations. The transmission system operators in the Central Western Europe region (CWE) acer.europa.eu ooperate closely with one another within the framework of the flow-based approach. Further information can be found on the homepage of the Joint Allocation Office (JAO jao.eu).
The central project for optimal allocation in combination with the electricity exchanges is handled within the framework of Multi Regional Coupling (MRC). This covers nearly every country and every electricity market in Europe.