11.10.2021 16:12
Baltic CCM with Russia: Coordinated capacity calculation methodology with Russia (valid from 12.10.2021)
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342 KBThe purpose of the European Union’s electricity market regulation is to work out a common market model that would encourage competition and increase transparency necessary for making future investment decisions to ensure the system’s continuing supply security. The common market model includes sub-models that function in four different time periods and are regulated by three different network rules.
Pursuant to the network rules, market participants have various options both for trading and for lowering risks at their disposal. If the day ahead market is generally used for trading with physical energy, products offered on the financing services market are mostly intended for lowering the risks of the market participants. It is important to note that network rules do not regulate trade with third countries (like Russia and Belarus).
The transmission system operator Elering is responsible for the allocation of cross-border transmission capacities, and does that in accordance with European Union directives and Estonia’s Electricity Market Act. The principles of allocating cross-border transmission capacities are set forth in the EU regulation No 714/2009, and in 2015/1222 (CACM) network rules.
When allocating transmission capacities, the transmission system operator must ensure the security of supply of the system. In accordance with Estonia’s network rules, the transmission system operator allows the import and export of electricity to/from other systems, as well as transit over the main transmission system operator’s grid to the extent and under the conditions that do not directly damage the national power grid, do not impose additional restrictions on domestic electricity consumption, and do not have adverse impact on the security of supply and quality of electricity available to the national power grid’s consumers.
Because electricity grids have generally connections to electricity grids in other countries, corresponding transmission system operators have to cooperate at both regional and European level already at the time of making long-term plans to achieve the best results. Estonia’s electricity grid has connections to the electricity grids of Finland, Russia, and Latvia. Due to these interconnections and the allocation principles for capacities applied, market participants in these countries have the opportunity to trade in Estonia, and market participants in Estonia have the opportunity to trade in the electricity systems of neighbouring countries.
Calculations of cross-border capacities are made on the basis of the grid’s physical and electrical properties. Coordinated Net Transmission Capacity (CNTC) and flow-based methods are used in Europe. In the case of the CNTC method, maximum available transmission capacity between adjacent bidding areas is determined beforehand. In the case of the flow-based method, each network element’s data in the form of a matrix are taken into consideration. Energy transmission between bidding areas are going to be limited by critical network elements and electricity transmission allocation factors (i.e., which lines are used for electricity flow allocation). The Baltic countries and Nordic countries use the CNTC method, which is described in more detail in the next chapter – Transmission Capacity Allocation in Estonia.
The methodologies enable the transmission system operators to fulfil the Commission Regulation (EU) 2015/1222 establishing a guideline on capacity allocation and congestion management and Regulation (EU) 2016/1719 establishing a guidline on forward capacity allocation.
Estonia-Finland
The electricity networks of Estonia and Finland are connected by HVDC submarine cables EstLink 1 and EstLink 2. In November 2013, Elering and Fingrid signed the Agreement on the Operation and Maintenance of the Interconnections between Finland and Estonia. The agreement defines the principles of calculation and distribution of transmission capacity between two countries, and the corresponding procedures. Pursuant to the agreement, transmission system operators (TSO-s) act on the following principles:
Estonia-Latvia
On 11 November 2015, the Baltic electricity network operators AS ‘Augstsprieguma tīkls’, AS Elering, and AB Litgrid reached an agreement on the rules of cross-border capacity calculation and allocation within the Baltic States and on the borders with third states (‘Terms, Conditions and Methodologies on Cross-Zonal Capacity Calculation, Provision and Allocation within the Baltic States and with the 3rd Countries’), the agreement took effect on 1 January 2016. Pursuant to the rules, when determining the transmission capacity value between two networks, it is calculated by both TSOs by using computer programs and the CNTC method. If the calculated values do not match, the lowest of them is used to ensure the stability of the networks. TSO-s guarantee that all NTC between the bidding areas will be given to Nord Pool for day-ahead trading. Any available transmission capacity left unused after day-ahead trading will be offered to the intra-day market.
Trade with Russia
According to the capacity calculation methodology agreed between Estonian and Latvian TSOs, starting from 05.11.2021 all available capacity for day-ahead trade is given to Latvia-Russia border. No intraday trade is taking place on that border.
Commission Regulation 1719/2016 (FCA) specifies instruments for long term transmission capacity allocation, with the purpose of providing the ability to hedge against interregional price risks that are caused by a deficit of transmission capacity. Network operator is obliged to offer the instruments if national regulatory bodies (Estonian Competition Authority in Estonia) have deemed it necessary.
Estonian Competition Authority in cooperation with Finnish and Latvian NRAs have issued a decision on 17th of May 2017 on cross- zonal risk hedging opportunities on Estonian cross- borders as follows:
Interregional price risks are part of general electricity price volatility risks, and their main cause is the lack of transmission capacity between different bidding regions, which in other words means that electricity has different price in different regions. Estonian and Latvian network operators Elering and AS ‘Augstsprieguma tīkls’ offer yearly, quarterly, and monthly FTRs to the transmission capacity between Estonia and Latvia in direction from Estonia to Latvia. Harmonised allocation rules (HAR) for PTR´s and FTR´s can be found here. The auction calendar to Estonia-Latvi border for year 2019 and 2020 can be found below in attachment.
FTR auctions are organised by Singel Allocation Platform (SAP) operated by JAO. Additional information about the conditions, timeline, and results of FTR auctions is available at the JAO website at www.jao.eu.
Network operators do not offer long term cross-border transmission risk hedging instruments for Estonia-Finland and Estonia-Russia bidding zone borders.
Pursuant to the agreement between Elering AS and AS ‘Augstsprieguma tīkls’, AS ‘Augstsprieguma tīkls’ started organising the auctions starting from 30 November 2016.
Additional information about the conditions, timeline, and results of PTR-limited auctions on a yearly basis is available via the drop-down side menu and at the AS ‘Augstsprieguma tīkls’ website.
Estonian network operator Elering and Latvian network operator Augstsprieguma tīkls (AST) have reached an agreement on the replacement of hitherto used PTR-Limited rules with harmonised Europe-wide cross-border capacity allocation rules (EU HAR); the agreement established Regional Annex for Estonia-Latvia cross-border rules. Both documents have been approved by Estonian and Latvian regulators.
Further information about the rules and templates can be found here:
The PTR-Limited auction results for 2016:
Timeline, capacities, and results of the auctions will be provided on Elering’s website; the principles governing the setup of auctions are provided in the document PTR-Limited Auction Rulebook_2015.
The list of participants of PTR-limited auctions
The results for PTR-limited auctions 2015
There was no reduction in market tradeable transmission capacity for the Estonia-Latvia interconnector, 100% of it was given to Nord Pool for allocation.
Timeline, capacities, and results of the auctions will be provided on Elering’s website; the principles governing the setup of auctions are provided in the document PTR-Limited Auction Rulebook_2014.
The list of participants of PTR-limited auctions
The results for PTR-limited auctions 2014
There was no reduction in market tradeable transmission capacity for the Estonia–Latvia interconnector, 100% of it was given to Nord Pool for allocation.
A party to the ITC is a country whose transmission network operator has joined the ITC Agreement. A perimeter country is a country sharing a border with the Republic of Estonia whose transmission network operator has not joined the ITC Agreement. The Russian Federation is a perimeter country for Estonia.
The perimeter fee is a fee payable on supplies with the market participants of perimeter countries pursuant to the ITC Agreement.
In 2021, the perimeter fee was 0.6 EUR/MWh.
In 2022, the perimeter fee is 1.2 EUR/MWh.
Perimeter fees are paid by balance providers.
The transmission system operator Elering is responsible for the allocation of cross-border transmission capacities, and does that in accordance with European Union directives and Estonia’s Electricity Market Act. The principles of allocating cross-border transmission capacities are set forth in the EU regulation No 714/2009, and in 2015/1222 (CACM) network rules.
When allocating transmission capacities, the transmission system operator must ensure the security of supply of the system. In accordance with Estonia’s network rules, the transmission system operator allows the import and export of electricity to/from other systems, as well as transit over the main transmission system operator’s grid to the extent and under the conditions that do not directly damage the national power grid, do not impose additional restrictions on domestic electricity consumption, and do not have adverse impact on the security of supply and quality of electricity available to the national power grid’s consumers.
Because electricity grids have generally connections to electricity grids in other countries, corresponding transmission system operators have to cooperate at both regional and European level already at the time of making long-term plans to achieve the best results. Estonia’s electricity grid has connections to the electricity grids of Finland, Russia, and Latvia. Due to these interconnections and the allocation principles for capacities applied, market participants in these countries have the opportunity to trade in Estonia, and market participants in Estonia have the opportunity to trade in the electricity systems of neighbouring countries.
Calculations of cross-border capacities are made on the basis of the grid’s physical and electrical properties. Coordinated Net Transmission Capacity (CNTC) and flow-based methods are used in Europe. In the case of the CNTC method, maximum available transmission capacity between adjacent bidding areas is determined beforehand. In the case of the flow-based method, each network element’s data in the form of a matrix are taken into consideration. Energy transmission between bidding areas are going to be limited by critical network elements and electricity transmission allocation factors (i.e., which lines are used for electricity flow allocation). The Baltic countries and Nordic countries use the CNTC method, which is described in more detail in the next chapter – Transmission Capacity Allocation in Estonia.
The methodologies enable the transmission system operators to fulfil the Commission Regulation (EU) 2015/1222 establishing a guideline on capacity allocation and congestion management and Regulation (EU) 2016/1719 establishing a guidline on forward capacity allocation.
Estonia-Finland
The electricity networks of Estonia and Finland are connected by HVDC submarine cables EstLink 1 and EstLink 2. In November 2013, Elering and Fingrid signed the Agreement on the Operation and Maintenance of the Interconnections between Finland and Estonia. The agreement defines the principles of calculation and distribution of transmission capacity between two countries, and the corresponding procedures. Pursuant to the agreement, transmission system operators (TSO-s) act on the following principles:
Estonia-Latvia
On 11 November 2015, the Baltic electricity network operators AS ‘Augstsprieguma tīkls’, AS Elering, and AB Litgrid reached an agreement on the rules of cross-border capacity calculation and allocation within the Baltic States and on the borders with third states (‘Terms, Conditions and Methodologies on Cross-Zonal Capacity Calculation, Provision and Allocation within the Baltic States and with the 3rd Countries’), the agreement took effect on 1 January 2016. Pursuant to the rules, when determining the transmission capacity value between two networks, it is calculated by both TSOs by using computer programs and the CNTC method. If the calculated values do not match, the lowest of them is used to ensure the stability of the networks. TSO-s guarantee that all NTC between the bidding areas will be given to Nord Pool for day-ahead trading. Any available transmission capacity left unused after day-ahead trading will be offered to the intra-day market.
Trade with Russia
According to the capacity calculation methodology agreed between Estonian and Latvian TSOs, starting from 05.11.2021 all available capacity for day-ahead trade is given to Latvia-Russia border. No intraday trade is taking place on that border.
Commission Regulation 1719/2016 (FCA) specifies instruments for long term transmission capacity allocation, with the purpose of providing the ability to hedge against interregional price risks that are caused by a deficit of transmission capacity. Network operator is obliged to offer the instruments if national regulatory bodies (Estonian Competition Authority in Estonia) have deemed it necessary.
Estonian Competition Authority in cooperation with Finnish and Latvian NRAs have issued a decision on 17th of May 2017 on cross- zonal risk hedging opportunities on Estonian cross- borders as follows:
Interregional price risks are part of general electricity price volatility risks, and their main cause is the lack of transmission capacity between different bidding regions, which in other words means that electricity has different price in different regions. Estonian and Latvian network operators Elering and AS ‘Augstsprieguma tīkls’ offer yearly, quarterly, and monthly FTRs to the transmission capacity between Estonia and Latvia in direction from Estonia to Latvia. Harmonised allocation rules (HAR) for PTR´s and FTR´s can be found here. The auction calendar to Estonia-Latvi border for year 2019 and 2020 can be found below in attachment.
FTR auctions are organised by Singel Allocation Platform (SAP) operated by JAO. Additional information about the conditions, timeline, and results of FTR auctions is available at the JAO website at www.jao.eu.
Network operators do not offer long term cross-border transmission risk hedging instruments for Estonia-Finland and Estonia-Russia bidding zone borders.
Pursuant to the agreement between Elering AS and AS ‘Augstsprieguma tīkls’, AS ‘Augstsprieguma tīkls’ started organising the auctions starting from 30 November 2016.
Additional information about the conditions, timeline, and results of PTR-limited auctions on a yearly basis is available via the drop-down side menu and at the AS ‘Augstsprieguma tīkls’ website.
Estonian network operator Elering and Latvian network operator Augstsprieguma tīkls (AST) have reached an agreement on the replacement of hitherto used PTR-Limited rules with harmonised Europe-wide cross-border capacity allocation rules (EU HAR); the agreement established Regional Annex for Estonia-Latvia cross-border rules. Both documents have been approved by Estonian and Latvian regulators.
Further information about the rules and templates can be found here:
The PTR-Limited auction results for 2016:
Timeline, capacities, and results of the auctions will be provided on Elering’s website; the principles governing the setup of auctions are provided in the document PTR-Limited Auction Rulebook_2015.
The list of participants of PTR-limited auctions
The results for PTR-limited auctions 2015
There was no reduction in market tradeable transmission capacity for the Estonia-Latvia interconnector, 100% of it was given to Nord Pool for allocation.
Timeline, capacities, and results of the auctions will be provided on Elering’s website; the principles governing the setup of auctions are provided in the document PTR-Limited Auction Rulebook_2014.
The list of participants of PTR-limited auctions
The results for PTR-limited auctions 2014
There was no reduction in market tradeable transmission capacity for the Estonia–Latvia interconnector, 100% of it was given to Nord Pool for allocation.
A party to the ITC is a country whose transmission network operator has joined the ITC Agreement. A perimeter country is a country sharing a border with the Republic of Estonia whose transmission network operator has not joined the ITC Agreement. The Russian Federation is a perimeter country for Estonia.
The perimeter fee is a fee payable on supplies with the market participants of perimeter countries pursuant to the ITC Agreement.
In 2021, the perimeter fee was 0.6 EUR/MWh.
In 2022, the perimeter fee is 1.2 EUR/MWh.
Perimeter fees are paid by balance providers.
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