Development of methodologies related to capacity calculation and allocation in balancing timeframe
Application of an allocation process of cross-zonal capacity
What is it about?
Two or more TSOs exchanging balancing capacity need to ensure the overall availability of the cross-zonal capacity for the exchange of balancing capacity. This can be done through the allocation of cross-zonal capacity for the exchange of balancing capacity or for sharing of reserves.
There are three different processes for allocating cross-zonal capacity:
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co-optimised allocation process (Article 40)
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market-based allocation process (Article 41)
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allocation process based on economic efficiency analysis (Article 42).
If TSOs opt for applying one of these processes, they need to further specify the relevant bidding zone borders, the timeframe and the duration of the application of the respective methodology.
Legal basis: Article 38(1) of the EB Regulation
Responsibility: two or more TSOs are allowed to apply the methodology for cross-zonal capacity allocation process for the exchange of balancing capacity or sharing of reserves.
Current status: The proposal for the application of the methodology from frequency restoration reserves with automatic activation submitted by the TSOs of Denmark, Finland and Sweden was approved by ACER in August 2020.The proposal for the application of the methodology for frequency containment reserves and frequency restoration reserves for the Baltic capacity calculation region (Baltic balancing capacity market), submitted by the TSOs of Estonia, Latvia and Lithuania, was approved by the Baltic regulatory authorities in February 2024.
Implementation: The methodology for the Nordic capacity calculation region has been implemented with the go-live of the capacity calculation methodology, according to the CACM Regulation. The methodology for the Baltic capacity calculation region will be implemented once the capacity calculation methodology for the Baltic capacity calculation region is applied according to the CACM Regulation.
Documentation on the approval process of these proposals.
Harmonisation of the methodology for allocating cross-zonal capacity for the exchange of balancing capacity or sharing of reserves
What is it about?
This methodology provides a harmonised approach for the processes of allocating cross-zonal capacity for the exchange of balancing capacity or sharing of reserves, which can be applied by any group of TSOs.
The methodology will foster the optimisation of the allocation process and may also involve the market-based allocation process and the allocation process based on economic efficiency (Article 40, 41 and 42).
The methodology will replace the regional methodologies for allocating cross-zonal capacities to the balancing timeframe.
Legal basis: Article 38(3) of the EB Regulation
Responsibility: all TSOs
Current status: The harmonised cross-zonal capacity methodology was approved by ACER in July 2023. A proposal for amendment was submitted by TSOs on 31 July 2024. ACER expects to reach a decision by 31 January 2025. ACER is organising a public consultation from 16 September to 14 October to inform its decision-making process.
Implementation: The harmonised market-based process should be ready for application by July 2025. The implementation deadline of the co-optimised allocation process is defined in the single day-ahead coupling algorithm methodology (Article 37 of the Capacity Allocation and Congestion Management Regulation).
Read more on the latest approved methodology for a co-optimised allocation process.
Documentation on the approval process of this methodology:
- TSO proposal for the harmonised methodology for cross-zonal capacity allocation for the exchange of balancing capacity or sharing of reserves (16 December 2022);
- TSO proposal for the Regional Coordination Centres' (RCCs') tasks of regional sizing of reserve capacity (17 March 2023);
- TSO proposal for the RCCs' tasks of facilitating the procurement of electricity balancing capacity (17 March 2023)
- ACER Decision No 11-2023 on the TSOs’ proposal for the harmonised cross-zonal capacity allocation methodology (19 July 2023);
- ACER Decision No 12-2023 on the Regional Coordination Centre Regional Sizing of Reserve Capacity Methodology (19 July 2023); and
- ACER Decision No 13-2023 on the Regional Coordination Centre Regional Procurement of Balancing Capacity Methodology (19 July 2023).
- TSO proposal for the amendment of the harmonised methodology for cross-zonal capacity allocation for the exchange of balancing capacity or sharing of reserves (31 July 2024).
Methodology for a co-optimised allocation process of cross-zonal capacity
What is it about?
The co-optimised allocation process is based on a comparison of actual market values of cross-zonal capacity for the exchange of energy and of balancing capacity or sharing of reserves. Its methodology describes the associated rules for allocating cross-zonal capacity across timeframes.
The market values is based on the bids of market participants, submitted for day-ahead energy and balancing capacity markets.
The cross-zonal capacity will be allocated across the balancing and day-ahead timeframe to maximise the combined overall welfare gains.
Legal basis: Article 40(1) of the EB Regulation
Responsibility: all TSOs
Current status: The methodology for a co-optimised allocation process was approved by ACER in June 2020.
Implementation: The implementation is on-going.
All TSOs are currently conducting an impact assessment for the implementation of the co-optimised allocation process and will provide the relevant requirements for the singe day-ahead coupling algorithm to Nominated Electricity Market Operators (NEMOs).
NEMOs need to consider this implementation when submitting amendments of the single day-ahead coupling algorithm methodology (Article 37 of the Capacity Allocation and Congestion Management Regulation).
Read more on the latest approved methodology for a co-optimised allocation process.
Documentation on the approval process of this methodology.
Methodology for a market-based allocation process of cross-zonal capacity
What is it about?
The market-based allocation process is based on a comparison of market values of cross-zonal capacity for the day-ahead and balancing timeframe. Its methodology establishes the rules for allocating cross-zonal capacity for the exchange of balancing capacity or sharing of reserves.
While one of the two market values is based on the bids of market participants, the second one is based on a forecast. The cross-zonal capacity is then allocated across the balancing and energy timeframe with the aim of maximising the expected combined overall welfare gains.
Legal basis: Article 41(1) of the EB Regulation
Responsibility: all TSOs in each capacity calculation region
Current status: Methodologies for a market-based allocation process were approved for the Baltic, Core, GRIT, Italy North and Nordic capacity calculation regions.
Implementation: Different regions have different implementation timelines. Some regions have already implemented the methodology, whereas some other are expected to do so by 2025.
Methodology for an allocation process of cross-zonal capacity based on economic efficiency analysis
What is it about?
The allocation process is based on a comparison of forecasted market values of cross-zonal capacity for the exchange of energy, balancing capacity or sharing of reserves. Its methodology describes the rules for allocating cross-zonal capacity across timeframes.
The cross-zonal capacity will be allocated across the balancing and energy timeframe to maximise the expected combined overall welfare gains.
Legal basis: Article 42(1) of the EB Regulation
Responsibility: all TSOs in each capacity calculation region
Current status: Methodologies were submitted for the Core, Greece-Italy (GRIT) and Italy North capacity calculation regions. Core and Italy North were withdrawn during the approval process, while GRIT was approved.
Implementation: No implementation is foreseen.