Development and Impact of Flow-Based Methodology in Core Region

Abstract

The Core Flow-Based Market Coupling Project (Core FB MC) focuses on the development and implementation of the day-ahead market activities in the Core Capacity Calculation Region (Core CCR) within the Single Day-Ahead Coupling (SDAC). The Transmission System Operators (TSO) and Nominated Electricity Market Operators (NEMO) of the Core CCR aim to introduce FB MC at the regional level and ultimately, to facilitate the merger of regional markets and the creation of a fully integrated European Internal Energy Market.

Flow-Based Market is currently deployed within the Single Day-Ahead Coupling across Central Western Europe (CWE) covering Austria, Belgium, France, Germany, Luxemburg and the Netherlands. Within the Core Flow-Based Market Coupling project, all borders of the Core CCR will be coupled based on the Flow-Based capacity calculation methodology developed in the framework of the Capacity Allocation and Congestion Management (CACM) Regulation. The Core CCR consists of the bidding zone borders between the following EU Member States` bidding zones: Austria, Belgium, Croatia, Czech Republic, France, Germany, Hungary, Luxembourg, the Netherlands, Poland, Romania, Slovakia and Slovenia.

The Flow-Based Methodology is a methodology in which physical network constraints are obtained based on the available constraints on the critical elements of the network (branch) and the power transmission allocation factors that are defined for each critical branch and each zone (Bidding Zone) within Core CCR. These factors describe how the position of each bidding zone changes when the energy flow in the critical branch changes. The computer algorithm then seeks an optimal exchange of energy between the bidding zones.

Compared to the existing Net Transmission Capacity (NTC) methodology, the FB methodology takes into account multiple parameters and optimization conditions and therefore better reflects the actual circumstances in the network. The methodology for calculating the flows of power derives from the Commission Regulation (EU) 2015/1222 on the Establishment of CACM regulation (Article 20) and represents an important part of the European Target Model. The methodology contributes to reducing the price differences between national electricity markets, which leads to more stable prices, and increases the social benefits of the involved countries.

This paper will provide historical overview of the Core FB MC project, which is based on the decision of the Agency for the Cooperation of Energy Regulators (ACER) on November 17^th, 2016. It will further on provide a presentation of all the working groups and their tasks within the FB MC project, high-level architecture and information flows, a detailed description of test processes divided into separate test

Given that the project is still in the implementation phase, and that Croatia is part of it since 2016, article will look at the local perspective and expectation from the moment of realization of the project, but will as well give an overall progress picture of the energy market and energy trading for the entire Core region.