Introduction to interconnections

The European grids are interconnected

The European power transmission grids are interconnected, so as to be able to transmit energy from one country to the other. It is thus possible to compensate for the sudden outage of a power generation or transmission facility by calling upon the generation and transmission companies of neighbouring countries. These interconnections are therefore first used to ensure the operating safety of the power transmission networks.

New practices

Since the opening of the European electricity market, these interconnection grids have also enabled power suppliers to sell their energy to customers in another country of the European Union. Requests to gain access to and use the networks have also increased depending on the opportunities and prices available on this market.

Limited capacities

However, the volume of these transfers is limited by the interconnection capacities of each national transmission network with that of its neighbours.
The physical capacities (or thermal capacities, expressed in Amperes) of the lines depend solely on the characteristics of the facilities and the period of the year (they are higher in winter). However, due to the operating complexity of a meshed network, the relation between commercial capacities and physical capacities is subtle. Indeed, the physical flows only depend on "injections" (generation) and "extractions" (consumption) at the different nodes of the network and not on the exports and imports declared by the players of the market.
That is why RTE has developed a method for the determination of commercial capacities based on the physical capacities available on the network.

The contractual framework

Once these commercial capacities have been defined, the players of the European electricity market who wish to use them must make the request to do so according to the particular conditions of each interconnection.
Thus, in order to gain access to the interconnections, a market player must:

These conditions have been set up, either on a co-ordinated basis with the neighbouring TSOs (Italy, England, Germany, Spain and Belgium), or unilaterally when the context has not yet allowed or has not required a bilateral agreement with the neighbouring TSOs (Switzerland).

The mechanisms in place

In order to set up an import or an export programme exchange, a market partie must first acquire capacity rights- allocation step – and then declares to TSOs the exchanges programm it whishes to implement within the capacity acquired - nomination step.

The available commercial capacity is allocated through different timeframes:

  • a part of this capacity is allocated as periodic Physical Transmission Rights (yearly and monthly “PTRs”), except on France-Belgium border where since from 1st January 2016, the rights are Financial Transmission Right (“FTR options” at yearly and monthly timeframes), which are not nominated anymore
  • the other part is allocated as daily Physical Transmission Rights.

There is no capacity reservation for the intra-daily allocations.

On the French borders, the periodic PTRs are allocated through explicit auctions, the daily PTRs through explicit or implicit auctions, according to the border, and the  intra day PTRs through explicit or implicit allocations or improved prorata mechanism, according to the border.

Since 2007, it is possible with a secondary market of capacities to transfer capacities, acquired through yearly and/or monthly auctions, between two Users, or to resell via RTE yearly capacity at monthly auctions.

The PTRs acquired at yearly and monthly auctions and non nominated are automatically resold at daily allocations. The periodic non nominated PTRs holders receive a financial compensation (Use It Or Sell It) equal to :

  • the marginal price of the daily auction in case of daily explicit auctions,
  • the price difference between the 2 markets in case of daily implicit auctions.

The PTRs acquired at daily allocations and non nominated are resold at intra day allocations if the reliability conditions of the power system so permit. There is no financial compensation for the daily non nominated PTRs holders (Use It Or Loose It).

A summary of the capacity allocation mechanisms is presented below.

For further details, click on the name of the countries.


Exports and Importations
Country Allocation mechanisms Agreement
England Explicit annual, seasonnal, quarterly, monthly, week-end, daily and intra-daily auctions with National Grid
Belgium Explicit annual and monthly auctions, implicit allocation by market coupling in day-ahead, improved prorata in intraday with ELIA
Germany Explicit annual and monthly auctions, implicit allocation by market coupling in day-ahead, implicit and explicit allocations in intraday with Amprion et EnBW
Italy Annual, Monthly and Daily Explicit Auctions by CASC.EU Agreement with all TSO operating on Italian borders (APG, ELES, HTSO, RTE, Swissgrid et TERNA)
Switzerland

Annual, monthly and daily auctions : Explicit auctions for the available capacity on this border
Intraday: continuous implicit and explicit allocations mechanism.

With Swissgrid
Spain Explicit annual, monthly daily and intra-daily auctions with REE