Congestion income
The system of congestion income (also called congestion charge/bottleneck charge) applies throughout Europe.
Electricity is a commodity in the single European market and must be able to move freely from Gibraltar to the North Cape. For this purpose, interstate connections have been built to enable energy to be sold from a lower-cost region to a higher-cost region. If there is enough connection capacity, prices equalise. If there is not enough transmission capacity, so-called congestion occurs and prices cannot be equalised between the two exchange areas. Under the congestion charge mechanism, market operators/exchanges pay transmission system operators a congestion charge equal to the product of the commercial flow and the price difference every hour in the event of a price difference.
Congestion can occur in all market time frames (i.e. in the long-term transmission capacity (FTR) offer, the frequency reserve capacity market (BBCM), the day-ahead and intraday electricity markets, as well as the balancing service (MARI and PIICASSO) markets). The principles for calculating congestion income are set out in the FCA, CACM and EBGL regulations and agreed upon in the rules set out below. The use of congestion income is governed by Regulation 2019/943 on the internal market for electricity.
Congestion income is not profit for Elering, but earmarked funds to eliminate the lack of transmission capacity on the same boundary. Revenue from the allocation of cross-zonal capacity must be used primarily to ensure the actual availability of the allocated capacity (including the provision of FTR) or to maintain or increase cross-zonal capacity. For example, if there is congestion on our connections between Estonia and Finland, money will be received into this fund, which can be used to build Estlink 3, an additional connection.
The receipt of the collected congestion income is published by Elering in its annual reports and its use is audited by the Competition Authority. To date, Elering has used congestion income to build the Estlink 2 and the third Estonian-Latvian connection and the line reinforcements necessary for desynchronisation from Russia. Congestion income is also used to provide long-term transmission hedging instruments (FTR). In addition, Elering plans to use the collected congestion income for the construction of Estlink 3 and the fourth Estonian-Latvian connection.
- Article 73 of Regulation 2015/1222 CID: Congestion income distribution methodology (NEW December 2023) (21 December 2023) (in estonian)
- Article 73 of Regulation 2015/1222 CID: Congestion income distribution methodology (from December 2021 to December 2023) (19 December 2021) (in estonian)
- Article 73 of Regulation 2015/1222 CID: Congestion income distribution methodology (7 January 2020) (in estonian)
- Article 74 of Regulation 2015/1222 Baltic CRCCS: Baltic CRCCS: Methodology for redispatching and countertrading cost sharing of Baltic loads (7 January 2020) (in estonian)
- Article 57 of Regulation 2016/1719 FCA supplemented CID: Supplemented methodology for sharing capacity allocation revenue received from the allocation of capacity on the forward market (March 2023) (23 March 2023) (in estonian)
- Article 61 of Regulation 2016/1719 FCA supplemented FRC: Supplemented methodology for sharing costs incurred to ensure firmness and remuneration of long-term transmission rights (March 2023) (23 March 2023) (in estonian)