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Highlights

* German BNetzA calls for capacity allocations from July 3, 2018
* Measures necessary as power grid bottlenecks have increased
* Congestion management in line with European regulations

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Germany's power grid regular Bundesnetzagentur (BNetzA) Friday called upon the country's four TSOs to prepare the introduction of capacity allocations on the border with Austria, in effect splitting the common power price zone with Germany, Europe's most liquid power market.

BNetzA aims to implement the measures from July 3, 2018, it added.

"The introduction of capacity allocations on the German-Austrian border by summer 2018 has become necessary, because power grid transmission capacity in Germany, Austria, Poland and the Czech Republic no longer have the technical capacity to transport the power traded within the current common price zone even if a successful grid expansion is assumed in the long term," BNetzA said in a statement.

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"Setting up congestion management at the German-Austrian border is intended to ensure that the electricity market stays functional long-term and to guarantee security of supply in Germany and across the entire region," BNetzA president Jochen Homann said.

According to BNetzA, the groundwork for congestion management should be laid because electricity exports to Austria are increasing and rapidly leading to cases of network congestion between Germany and Austria.

"However, we expect exchanges in electricity between both countries will still be possible to a very large degree. The caps will merely apply to trade peaks," the BNetzA president added.

Preparations for the introduction of capacity allocations will include day-ahead, intraday and forward power trading, it added.

AUSTRIAN BORDER'S SPECIAL TREATMENT NOW SEEN AS RISK


At present, the transmission system operators (TSOs) have to carry out large scale, very costly redispatching measures to ensure system security, it said.

"The need for redispatching measures has largely come from our inability to manage this transport capacity at the Austrian border. Congestion management is in place at other borders," BNetzA said. "The Austrian border's special treatment is becoming more of a risk for secure network operation," the German grid regulator said. The need for redispatching drops considerably when congestion management is in place to ensure that exchanges in electricity are based on the transport capacity that is technically available, it added.

IN LINE WITH EU LAW


Setting the cross-border electricity trade cap at a level that corresponds to the available network capacity is in line with the requirements of European law, it said.

In fact it is necessary as the excessive trade between Germany and Austria threatens system security in several countries and hinders the participation of other states in cross-border exchanges in electricity, it added.

BNetzA assumes that the introduction of congestion management between Germany and Austria will be endorsed by the current European processes on the bidding zones review and on the determination of capacity calculation regions.

Grid operators will cease the preparatory work on congestion management should these processes indicate that it will not have any positive effect, it added.

Moreover, ongoing network expansion in Germany and Austria makes the introduction of congestion management indispensable, BNetzA added.

In their network development plans both countries are assuming that exchange capacity will not be sufficient long-term to safely transport trade peak capacity from Germany to Austria.

TSOs, EXCHANGES TO LAY GROUNDWORK FOR PRICE ZONE SPLIT


TSOs together with power exchanges are now being tasked with laying the necessary groundwork to introduce congestion management, the regulator said. BNetzA said it is ready to support TSOs in carrying out this task.

Austria's cooperation in this regard is both useful and desirable in order to design efficient procedures and to take effective account of Austria's interests, it added.

Market players will be brought in to provide constructive support in appropriate form in subsequent stages of this transformation process, BNetzA said.

--Andreas Franke, andreas.franke@spglobal.com
--Edited by Alisdair Bowles, alisdair.bowles@spglobal.com