European Electricity Operation


The System Operation network codes aim to develop a harmonised system operation regime considering past experiences (e.g. coordination issues) and future challenges (renewable energy sources penetration), enabling at the same time the proper functioning and technical evolution of the European electricity market and transmission network through coordinated action from TSOs, DSOs and grid users.

System Operation covers the complete area of activities for operating electric power systems, including security, control and quality in terms of fixed technical standards, principles and procedures, but also the synchronous operation of interconnected power systems. System Operation covers the following areas for network codes according to Article 8(6) (a), (d), (e) and (f) of Regulation No (EC) 714/2009, set out respectively below:

  • network security and reliability rules including rules for technical transmission reserve capacity for operational network security;
  • data exchange and settlement rules;
  • ​interoperability rules;
  • operational procedures in an emergency; Source
Electricity TSO’s transparency platform  

Wholesale transparency promotes competition and market well-functioning, and positively reflects on the performance of the entire energy sector. Transparency can be improved through the disclosure of ex-ante and ex-post information, as well as through record keeping.

The governance of transparency in the European wholesale energy markets can be analysed from three different points of view: levels of governance (national/supranational), policy domains (sector-specific, financial, carbon), nature of enforcer (private/public) – While several pro-transparency initiatives were undertaken by market actors, the public governance of transparency is still a work in progress. The current regulation exhibits significant regulatory gaps which the EU is willing to fill through a new tailor-made market transparency framework.

The main challenge in this respect is represented by the need for coordination. Overlaps and inconsistencies with the existing national and supranational rules shall be avoided and the three different policy domains involved in energy trading shall develop more integrated implementation paths.

Transparency promotes markets well-functioning by ensuring that operators have an adequate understanding of the market and that the available data (prices and quantities) provide them the right signals. Moreover, transparency enhances competition. Operators holding greater market power enjoy an information advantage which they can use to deter entry and limit fair competition. Thus, information disclosure represents a useful instrument to create a level playing field for market participants, favour market oversight and detect abusive behaviours. More 

Network development and infrastructure regulation

ACER is carrying out various activities related to network development and infrastructure regulation. They relate to the following specific aspects:

  • Network development, which includes activities related to the ENTSO-E Ten Year Network Development Plan and national plans;

According to the Regulation(EC) 714/2009 of the European Parliament and of the Council, the European Network of Transmission System Operators for Electricity (ENTSO-E) adopts a non-binding Community-wide ten-year network development plan (TYNDP), including a European generation adequacy outlook, every two years. The main objectives of the TYNDP are:

  • to identify investment gaps, notably with respect to cross border capacities;
  • to contribute to a sufficient level of cross-border interconnection and to contribute to non-discrimination, effective competition and the efficient functioning of the market;
  • to ensure greater transparency regarding the entire electricity transmission network in the Community.

The Community-Wide TYNDP prepared by ENTSO-E builds on national investment plans prepared by the transmission system operators (TSOs) and takes into account the regional investment plans, which are published every two years on the basis of ENTSO-E regional cooperation.

The main ACER duties related to TYNDP are:

  • to provide opinion on the contribution of the TYNDP to the objectives set by the Regulation (EC) 714/2009;
  • to assess the consistency of Community-wide TYNDP and national plans;
  • to monitor the implementation of the TYNDP.

 

  • Infrastructures, which includes activities for the implementation of Regulation (EU) No 347/2013 regarding trans-European energy infrastructures; 

Regulation (EU) No 347/2013 of the European Parliament and of the Council aims at ensuring timely development of the trans-European energy infrastructures. To this end, the Regulation identifies 12 priority corridors and areas covering electricity, gas, oil and carbon dioxide transport networks and establishes a regime of “common interest” for projects contributing to implementing these priorities. In order to be considered as a project of common interest (PCI), an infrastructure project has to meet the criteria defined in article 4 of Regulation 347/2013 (in particular electricity PCIs should contribute to market integration, competition and system flexibility, sustainability and/or security of supply).

For each of the 12 priority corridors and areas the Regulation establishes a Regional Group, which adopts a draft regional list of proposed PCIs. Then, after the Opinion of the Agency, the European Commission adopts the Union list of PCIs, if no objections are raised by the European Parliament or by the Council. The list of PCIs is updated every two years.

The implementation of PCIs is monitored on an annual basis by the Regional Groups and by the Agency.

Infrastructure projects with the “PCI label” will benefit from faster and more efficient permit granting procedures and improved regulatory treatment. PCIs  may also have access to financial support from the Connecting Europe Facility Regulation.

Further, the Regulation requires ENTSO-E and ENTSO-G to develop methodologies, for a harmonised energy system-wide cost-benefit analysis (CBA) at Union level for infrastructure projects, to be applied for the preparation of ten year network development plan developed by the ENTSOs. The Agency published a position on the ENTSO-E CBA methodology in January 2013 and then issued its Opinion in January 2014.

Promoter(s) of a PCI may request the concerned national regulatory authorities (NRAs) to allocate the project’s investment costs to the transmission system operators of the Member States to which the PCI provides a net positive impact. In case the concerned NRAs do not reach an agreement on the cross-border cost allocation (CBCA) within six months from application, the decision has to be taken by the Agency. The Agency issued a recommendation on CBCA decisions for PCIs in the first Union list.

 

  • Inter-TSO compensation mechanism, which includes activities about the compensation for the costs of losses incurred as a result of hosting cross-border flows of electricity and for the costs of making infrastructure available for them.

The Inter-Transmission System Operator Compensation (ITC) mechanism is defined by the Commission Regulation (EU) 838/2010. The ITC mechanism provides compensation for:

  •  the costs of losses incurred by national transmission systems as a result of hosting cross-border flows of electricity, and
  •  the costs of making infrastructure available to host cross-border flows of electricity.

Part A of the Annex to the Regulation (EU) 838/2010 sets out guidelines on the ITC mechanism, covering the relevant costs, types of participants, derivation of the compensation and payment amounts and definitions of key input parameters. It also stipulates a number of duties for ACER, the key ones being:

  • to oversee the implementation of the ITC mechanism and report to the Commission each year on the implementation of the ITC mechanism and the management of the ITC fund; and
  • to undertake its best endeavours to assess the annual cross-border infrastructure compensation fund within two years of the application of the ITC regulation, and recommend a figure to the Commission. Along with that recommendation, ACER is also required to provide opinion on suitability of the current methodology of using long run average incremental costs (LRAIC). In its opinion on suitability of LRAIC, the Agency concludes that the LRAIC methodology is – in the context of the current ITC  mechanism – of only limited suitability.

The System Operations Committee has 5 permanent regional groups based on the synchronous areas (Continental Europe, Nordic, Baltic, Great Britain, and Ireland-Northern Ireland), and 2 voluntary Regional Groups (Northern Europe and Isolated Systems).

Having a permanent character, these Regional Groups ensure compatibility between system operations on the one side and market solutions and system development issues on the other.

Regional Group

Participating Countries

Continental Europe Austria, Belgium, Bosnia-Herzegovina, Bulgaria, Czech Republic, Croatia, Denmark (West), France, FYROM, Germany, Greece, Hungary, Italy, Luxemburg, Montenegro, Nederland, Poland, Portugal, Romania, Serbia, Slovakia, Slovenia, Spain and Switzerland
Nordic Denmark (East), Finland, Norway and Sweden
Baltic Estonia, Latvia, Lithuania
UK Great Britain
Ireland Ireland, Great Britain

The Regional Groups will continue the system operations activities of former TSO associations in Europe, addressing technical and operational aspects specific to the synchronously interconnected system operation.

  • Continental Europe – former UCTE
  • Nordic – former NORDEL
  • Baltic – former BALTSO
  • UK – former UKTSOA
  • Ireland –  former ATSOI

 

Quickly after its start in March 2011, ACER has changed the RIs scope to fit to a new vision based on the four following principles:

  • A more project-oriented approach to help focus the understandably limited stakeholders’ resources on one single concrete and common project deemed to be most instrumental for the completion of the IEM;
  • A more pan-European dimension to ensure the involvement of all Members States and the dedication of resources to achieve the common overarching objective of completing the IEM by 2014;
  • A stronger stakeholders’ involvement and engagement to maintain the momentum and confidence throughout the implementation phase;
  • A more adequate governance structure to improve the decision-making process.

ACER hopes that this new vision will help the RIs to make yet a stronger contribution to the move from national or regional markets to an integrated IEM.

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