Coordinated auction project in Central Europe

Abstract

The demand for capacity reservations at the transmission interconnections between control areas in Central Europe is usually much higher than the capacity available for electricity trading. It is expected, that as a consequence of market opening according to the market liberalisation in Europe, the demand will further increase over time. In the beginning of 90th, before liberalisation of electricity market, there were vertically integrated utilities - monopolies in each of Central European countries. Cross border exchange was mainly between two utilities, and only as an addition to the overall national balance. Utilisation of interconnectors was planned together with system balance planning and there was under normal operation no congestions. Since 2002, demand for cross border capacity exceeded permanently offered capacities. Congestion management methods was gradually developed on different interconnectors depend on the level of electricity market opening in different states. The vast majority of electricity trading in control areas of concerned TSOs is thus based on OTC bilateral contracts. For that reason, explicit auctions was established as the most appropriate market mechanism for cross border capacity allocation. First auctions was organized independently on both sides of the interconnection i.e. two auctions for one interconnection. Soon after, under the pressure from traders side, concerned TSOs established on most of the interconnectors common bilateral auction. Due to the technical constrains in the regional network there are two possible technical limits, which must be taken into account. Either the internal network in one control area is congested as a consequence of the past development. Concerned TSO's in the region agreed to start a common regional auctioning procedure for transmission capacities reservation on all borders between them in the same time and to allocate available capacities on the congested profiles in the way which gives to market players a requested transmission capacity reservation on the indicated border . Auctions for yearly, monthly and daily capacities for the year 2005 was organized followed by monthly auctions. Daily auctions and capacity transfers among market participants are administrated by Internet based system through auction e-portal