Title IV, Chapter 2, Article 42 · Commission Regulation (EU) 2017/2195

Contents

Article 42Allocation process based on economic efficiency analysis#

1.By two years after entry into force of this Regulation, all TSOs of a capacity calculation region may develop a proposal for a methodology for the allocation of cross-zonal capacity based on an economic efficiency analysis. Such methodology shall apply for the exchange of balancing capacity or sharing of reserves with a contracting period of more than one day and where the contracting is done more than one week in advance of the provision of the balancing capacity. The methodology shall include:

(a)the rules and principles for allocating cross-zonal capacity based on an economic efficiency analysis;

(b)a detailed description of how to determine the forecasted market value of cross-zonal capacity for the exchange of balancing capacity or sharing of reserves, and an assessment of the market value of cross-zonal capacity for the exchange of energy;

(c)a detailed description of the pricing method, firmness regime and the sharing of congestion income for the cross-zonal capacity that has been allocated based on an economic efficiency analysis;

(d)the maximum volume of allocated cross-zonal capacity for the exchange of balancing capacity or sharing of reserves pursuant to paragraph 2.

2.The allocation of cross-zonal capacity based on an economic efficiency analysis shall be limited to 5 % of the available capacity for the exchange of energy of the previous relevant calendar year between the respective bidding zones or, in case of new interconnectors, 10 % of the total installed technical capacity of those new interconnectors. This volume limitation may not apply for bidding zone borders connected through DC interconnectors until the co-optimised or market-based allocation processes are harmonised at Union level pursuant to Article 38(3).

3.The methodology for the allocation of cross-zonal capacity based on an economic efficiency analysis shall be based on a comparison of the forecasted market value of cross-zonal capacity for the exchange of balancing capacity or sharing of reserves, and the forecasted market value of cross-zonal capacity for the exchange of energy.

4.The pricing method, the firmness regime and the sharing of congestion income for the cross-zonal capacity that has been allocated for the exchange of balancing capacity or sharing of reserves based on an economic efficiency analysis shall ensure equal treatment with the cross-zonal capacity allocated for the exchange of energy.

5.TSOs referred to in paragraph 1 shall develop a proposal for a list of each individual allocation of cross-zonal capacity based on an economic efficiency analysis. Such list shall include:

(a)the specification of the bidding zone border;

(b)the volume of allocated cross-zonal capacity;

(c)the period during which the cross-zonal capacity would be allocated for the exchange of balancing capacity or sharing of reserves;

(d)the economic analysis justifying the efficiency of such allocation.

6.TSOs referred to in paragraph 1 shall reassess the value of the allocated cross-zonal capacity in the process of the procurement of balancing capacity and release the allocated cross-zonal capacity which is no longer beneficial for the exchange of balancing capacity or sharing of reserves.

Defined terms · 41

Show every defined term

activation optimisation function
means the function of operating the algorithm applied to optimise the activation of balancing energy bids;
allocated volume
means an energy volume physically injected or withdrawn from the system and attributed to a balance responsible party, for the calculation of the imbalance of that balance responsible party;
balance responsible party
means a market participant or its chosen representative responsible for its imbalances;
balancing
means all actions and processes, on all timelines, through which TSOs ensure, in a continuous way, the maintenance of system frequency within a predefined stability range as set out in Article 127 of Regulation (EU) 2017/1485, and compliance with the amount of reserves needed with respect to the required quality, as set out in Part IV Title V, Title VI and Title VII of Regulation (EU) 2017/1485;
balancing capacity
means a volume of reserve capacity that a balancing service provider has agreed to hold and in respect to which the balancing service provider has agreed to submit bids for a corresponding volume of balancing energy to the TSO for the duration of the contract;
balancing energy
means energy used by TSOs to perform balancing and provided by a balancing service provider;
balancing energy gate closure time
means the point in time when submission or update of a balancing energy bid for a standard product on a common merit order list is no longer permitted;
balancing market
means the entirety of institutional, commercial and operational arrangements that establish market-based management of balancing;
balancing service provider
means a market participant with reserve-providing units or reserve-providing groups able to provide balancing services to TSOs;
balancing services
means balancing energy or balancing capacity, or both;
capacity procurement optimisation function
means the function of operating the algorithm applied for the optimisation of the procurement of balancing capacity for TSOs exchanging balancing capacity.
central dispatching model
means a scheduling and dispatching model where the generation schedules and consumption schedules as well as dispatching of power generating facilities and demand facilities, in reference to dispatchable facilities, are determined by a TSO within the integrated scheduling process;
common merit order list
means a list of balancing energy bids sorted in order of their bid prices, used for the activation of those bids;
connecting TSO
means the TSO that operates the scheduling area in which balancing service providers and balance responsible parties shall be compliant with the terms and conditions related to balancing;
contracting TSO
means the TSO that has contractual arrangements for balancing services with a balancing service provider in another scheduling area;
deactivation period
means the period for ramping from full delivery to a set point, or from full withdrawal back to a set point;
delivery period
means the period of delivery during which the balancing service provider delivers the full requested change of power in-feed to, or the full requested change of withdrawals from the system;
divisibility
means the possibility for a TSO to use only part of the balancing energy bids or balancing capacity bids offered by the balancing service provider, either in terms of power activation or time duration;
exchange of balancing capacity
means the provision of balancing capacity to a TSO in a different scheduling area than the one in which the procured balancing service provider is connected;
exchange of balancing energy
means the activation of balancing energy bids for the delivery of balancing energy to a TSO in a different scheduling area than the one in which the activated balancing service provider is connected;
exchange of balancing services
means either or both exchange of balancing energy and exchange of balancing capacity;
full activation time
means the period between the activation request by the connecting TSO in case of TSO-TSO model or by the contracting TSO in case of TSO-BSP model and the corresponding full delivery of the concerned product;
imbalance
means an energy volume calculated for a balance responsible party and representing the difference between the allocated volume attributed to that balance responsible party and the final position of that balance responsible party, including any imbalance adjustment applied to that balance responsible party, within a given imbalance settlement period;
imbalance adjustment
means an energy volume representing the balancing energy from a balancing service provider and applied by the connecting TSO for an imbalance settlement period to the concerned balance responsible parties, used for the calculation of the imbalance of these balance responsible parties;
imbalance area
means the area in which an imbalance is calculated;
imbalance netting process function
means the role to operate the algorithm applied for operating the imbalance netting process;
imbalance price
means the price, be it positive, zero or negative, in each imbalance settlement period for an imbalance in each direction;
imbalance price area
means the area for the calculation of an imbalance price;
imbalance settlement
means a financial settlement mechanism for charging or paying balance responsible parties for their imbalances;
imbalance settlement period
means the time unit for which balance responsible parties' imbalance is calculated;
integrated scheduling process
means an iterative process that uses at least integrated scheduling process bids that contain commercial data, complex technical data of individual power generating facilities or demand facilities and explicitly includes the start-up characteristics, the latest control area adequacy analysis and the operational security limits as an input to the process;
integrated scheduling process gate closure time
means the point in time when the submission or the update of integrated scheduling process bids is no longer permitted for the given iterations of the integrated scheduling process;
mode of activation
means the mode of activation of balancing energy bids, manual or automatic, depending on whether balancing energy is triggered manually by an operator or automatically in a closed-loop manner;
position
means the declared energy volume of a balance responsible party used for the calculation of its imbalance;
preparation period
means the period between the request by the connecting TSO in case of TSO-TSO model or by the contracting TSO in case of TSO-BSP model and the start of the ramping period;
requesting TSO
means the TSO that requests the delivery of balancing energy.
self-dispatching model
means a scheduling and dispatching model where the generation schedules and consumption schedules as well as dispatching of power generating facilities and demand facilities are determined by the scheduling agents of those facilities;
specific product
means a product different from a standard product;
standard product
means a harmonised balancing product defined by all TSOs for the exchange of balancing services;
transfer of balancing capacity
means a transfer of balancing capacity from the initially contracted balancing service provider to another balancing service provider;
validity period
means the period when the balancing energy bid offered by the balancing service provider can be activated, where all the characteristics of the product are respected.