The energy sector is developing rapidly. The process of European market integration began some years ago. Its purpose is to create a single European market that enables market parties to trade gas and electricity across national borders easily and efficiently.
The single European electricity market is constantly developing.
Electricity has been increasingly traded across national borders since the end of the nineties. The flows of electricity here primarily follow the different price levels in Europe. However, the transmission capacities at the interconnectors between the individual European neighbours are limited. The consequence is that today, the demand for transmission capacities for cross-border trading far exceeds the available capacity of the lines at many locations, resulting in cross-border congestions. If all requests were to be permitted, then overloads would inevitably be the consequence. The security of the grid could then no longer be guaranteed.
What we do to handle congestion in the grid
New power lines
TenneT invests in the construction of new power lines as well as in the further development of the existing allocation procedure in order to improve the situation in the long term and permanently. New lines, however, must pass through complex and time-consuming approval procedures. Therefore, it is necessary to allocate the scarce transmission capacities to the traders for reliable grid operation. Methods have been developed to cope with this task, which are grouped under the term Congestion Management.
Today, available capacities are mostly allocated by means of auctions. Auctions are transparent, market-oriented and free of discrimination and hence meet all the requirements of the European regulation. The transmission system operators (TSO) have set up bilateral or multilateral auction offices to carry out joint and coordinated auctions. They take over the operating side of handling congestion management.
TenneT belongs to four of the seven European regional markets (Northern Europe, Central Eastern Europe, Central Western Europe und Central South Europe) in which the harmonisation of a common single European electricity market is pursued for the time being. As the only German transmission system operator (TSO), TenneT is involved in four regional markets and hence has taken a central key role.
The allocation procedure in principle provides three time frames for congestion management: explicit annual and monthly transmission rights, day-ahead allocation and intraday allocation. Allocations are in part carried out explicitly, in the form of transmission rights that entitle nominating cross-border schedules, but also implicit within the framework of the so-called Market Coupling.
Explicit auctions of transmission rights are always carried out by the Joint Allocation Office (JAO).