November 7, 2019 (04:29)

Innovations in EU legislation affect the functioning of transmission system operators

In 2019, the EU has completed the adoption of key regulations under the Clean energy for all Europeans package, which aims to stimulate the transition to low-carbon energy through the implementation of energy efficiency measures, the development of RES and the integration of the energy market. Particular role in this process is given to the transmission system operators (TSOs), which have to ensure the reconfiguration of grid systems in connection with the decommissioning of fossil fuel generating facilities and the integration of large volumes of RES. TSOs are also responsible for the security of the operation of power systems and the extension of the technical capabilities of cross-border interaction in organized market segments and for balancing purposes.



Directive (EU) 2019/944 of the European Parliament and the Council as of 5 June 2019 on common rules for the internal electricity market and the amending Directive 2009/72 / EC contain the following innovations:


1. Paragraph 68 defines clear principles for the separation of electricity generation, supply and transportation, in particular,  the same person or persons are not entitled to exercise control or any right over a transmission system operator or transmission system should preclude the possibility of exercising control or any right over a producer or supplier. Within those limits, a producer or supplier should be able to have a minority shareholding in a transmission system operator or transmission system.


2. Article 1, paragraph 35 – TSO is a natural or legal person responsible for the operation and maintenance of and, if necessary, developing the transmission system in a given area and, where applicable, its interconnections with other systems, and for ensuring the long-term ability of the system to meet reasonable demands for the transmission of electricity.


3. Article 6, paragraph 2, TSO is entitled to refuse connection to the grid in regions with insufficient transmission capacity. At the same time, it is necessary to provide convincing evidence of such refusal to the national energy regulator.


4. Article 17, paragraph 2, TSO must ensure non-discrimination in the purchase of ancillary services and access for companies that are engaged in the aggregation of demand response (aggregators), along with electricity generators.


5. Article 31, paragraph 9, distribution system operators (DSOs) should cooperate with the TSOs in order to effectively involve market participants within their network to the retail, wholesale and balancing market segments, in particular to agree on the provision of balancing services and the use of so-called “flexibility services” (Article 32, paragraph 2).


6. Article 40 (i) procuring ancillary services to ensure operational security; (j) determining the form of cooperation and coordination between regional coordination centres; (k) participating in production of European and national reports on assessment (adequacy) of generating capacity; (l) digitalization of transmission systems; (m) data management, including its development, cybersecurity and data protection services within its competence.


7. Article 40, paragraph 3 – when performing its tasks, the TSO must take into account the recommendations of the regional coordination centers.


8. Article 40, paragraph 6 – TSO shall together with the energy regulator, ensure the creation of an IT base to attract ancillary services of the widest possible range of participants, including RES, electricity storage system operators and aggregators.


9. Article 54, the ownership of energy storage facilities by TSO implies that they shall not own, manage or operate such assets except in individual cases. The latter, in particular, provides for such a right if the energy storage facilities are fully integrated components of the network and the relevant authorization from the energy regulator is obtained. In turn, such permission is granted subject to the following conditions:


(a) other parties within the open tender have not acquired the right to own, operate or exercise operational control over energy storage facilities or are unable to provide such services at a reasonable cost and in a timely manner, provided that the energy regulator confirms the relevant decisions;

(b) such facilities or non-frequency ancillary services are necessary for the TSO to fulfill its obligations in an efficient and reliable manner, for the safe operation of the transmission system and are not used for the purchase or sale of electricity in organized market segments; and

(c) the energy regulator has assessed the need for such an exemption, carried out a preliminary assessment of the feasibility of the tender procedure, including the terms and conditions of the tender procedure, and has granted the relevant authorization.


At least every five years, the energy regulator shall publicly discuss the situation with potential stakeholders in the electricity market regarding its willingness to invest in the generation of storage facilities. If this is confirmed, the TSO should cease to provide such services within 18 months. At the same time, the energy regulator must ensure that the costs of the TSO are properly offset.


Moreover, the TSO may remain the owner of the accumulation systems if the final investment decision is made by 2024 and the following conditions are met:

(a) connection to the grid within the next two years;

(b) the accumulation system is integrated into the transmission system;

(c) it is used only for reactive short-term network security restoration in the event of overload and prior to the introduction of standard redispatching tools;

(d) it will not be used for purchase or sale of electricity in regulated market segments, including balancing services.


Article 62, paragraph 1 (b) provides that TSOs are the founders of regional coordination centers, and energy regulators are required to take into account costs related to the activities of the regional coordination centers in the calculation of tariffs.



Regulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity contains the following additions, which regulate the activities of transmission system operators:


1. (10) TSOs may delegate part of their functions to a third party, such as the imbalance settlements;


2. (13) TSOs can only buy balancing services after the closure of the domestic market; a settlement period of no more than 15 minutes is introduced in the EU;


3. (14) Effective use of balancing capacities requires accelerated market integration, in particular, the TSO should ensure cross-zonal capacity allocation for balancing capacity and reserve allocation. The methodology for cross-zonal capacity allocation should be agreed by the energy regulator and further harmonized with the methodologies of other TSOs to accelerate market integration;


4. (61) The TSOs should strengthen cooperation to create network codes for the provision and management of cross-border access, as well as the effective planning and modernization of energy infrastructure, in particular, with regard to climate goals and environmental protection;


5. Article 6, paragraph 4 – the TSO may propose an alternative methodology for calculating the cost of balancing services for consideration and approval by the national regulator if they consider it more effective than the maximum price cap method. In the case of the centralized dispatching model, the TSO may set additional rules;


6. Article 6, paragraphs 7-8 – the determination and purchase of reserve capacities should be carried out by the TSO based on regionally available resources, including cross-border capacity in the primary market;


7. Article 6, paragraph 9 – the procurement of upward balancing capacity and downward balancing capacity shall be carried out separately, unless the regulatory authority approves a derogation from this principle on the basis that this would result in higher economic efficiency as demonstrated by an evaluation performed by the TSO. Contracts for balancing capacity shall not be concluded more than one day before the balancing capacity and the contracting period shall be no longer than one day, unless otherwise approved by the regulatory authority. If the exemption is allowed, for at least 40% of standard balancing products and a minimum of 30% of all resources used for balancing capacity, contracts for the balancing capacity shall be concluded for no longer than one day and a day before the supply. The contracting of the remaining part of the balancing capacity shall be performed for a maximum of one month in advance of the provision of balancing capacity and shall have a maximum contractual period of one month. The regulatory authority may extend the contract upon request of the TSO, if such a need is justified in terms of security and economic feasibility, for a maximum of 12 months;


8. Article 6, paragraph 13 – TSO or their delegated operators shall publish as close to real time as possible, with a delay after delivery of no more than 30 minutes, the current system balance of their scheduling areas, the estimated imbalance prices and the estimated balancing energy prices;


9. Article 7 – TSO and Nominated Electricity Market Operators (NEMOs) jointly organize the management of the integrated day-ahead and intraday markets. At the same time, they shall provide maximum access to transmission capacities, if operational security allows;


10. Article 9, paragraphs 1-2 – TSOs may grant rights to long-term transmission capacity reserves in order to hedge price risks between borders across different trading zones (bidding zone). The rights to long-term reserve capacity are distributed through a single nomination platform (single allocation platform).


11. Article 13, paragraph 4 – TSOs shall, at least annually, report to the regulatory authority on: (a) effectiveness of market-based redispatching mechanisms for power generating, energy storage and demand response facilities; (b) the reasons, volumes in MWh and type of generation sources subject to redispatching; (c) the measures taken to reduce the need for the downward redispatching of generating installations, using RES or high-efficient cogeneration in the future, including investments in digitalization of the grid infrastructure and in services that increase flexibility.


12. Article 13, paragraph 5 – TSOs and DSOs shall ensure the capability of transmission and distribution networks to transmit electricity produced from RES and cogeneration units with a minimum level of redispatch.


13. Article 14 – in order to maximize cost-effectiveness, EU Member States, TSOs and regulatory authorities review existing trading zones (bidding zones). The purpose of such revision is to identify structural overloads in order to further avoid “bottlenecks” in power systems. The configuration of the zones shall be designed in such a way as to maximize economic efficiency within the zone and to enhance inter-zone (cross-border) trade.


14. Article 16, paragraphs1-3, the TSO should not create obstacles to cross-border trade. Trans-zonal transmission capacities should be calculated by regional coordination centers in order to ensure a coordinated response to market needs and maximize access to cross-border flows for all stakeholders. TSOs should provide verified data to regional coordination centers to ensure that energy needs and conditions for cross-border redistribution are properly assessed.


15. Article 16, paragraphs 7-9 – TSOs must provide opportunities for the free sale of rights to long-term reserves of electricity transmission capacities of at least 70% of cross-border flow capacities, provided that market participants are informed about such transactions in a timely manner. Certain restrictions are allowed provided that the TSO takes action to resolve them within one year from the date of receipt of the relevant approval from the regulatory authority.


16. Article 17 – TSOs should regularly review cross-zonal transmission capacities and redistribute available volumes among market participants, including for balancing purposes after intraday cross-zonal gate closure;


17. Article 18 – TSOs are entitled to fees for access to and use of networks, as well as their development, taking into account the strategic goals of market integration and the corresponding costs of digitalization, the research of infrastructure constraints and needs, the implementation of flexibility and interconnection services;


18. Article 19 – TSOs are entitled to receive revenue from participation in congestion management. TSOs should be used according to a methodology agreed with the regulatory authority and such use should contribute to the increase of cross-zonal transmission capacities;


19. Article 23, paragraph 4 – TSOs must ensure that ENTSO-E is regularly informed of capacity assessment in the area of ​​its responsibility for the preparation of annual pan-European reports;


20. Article 35 – by 5 July 2020, all TSOs should submit proposals for the establishment of regional coordination centers with their expected location, organizational and financial conditions. These legal entities should function independently of TSOs and be guided by the needs of the regional scale to integrate organized market segments;


21. Article 49 – TSOs are compensated for the costs incurred as a result of providing cross-border flows of electricity through their networks. Compensation shall be paid to the operators of the national transport systems where the cross-border flows begin and to the operators of the systems where those flows end. Compensation payments are made regularly with the necessary adjustments. The magnitude of the transboundary flows received and the magnitude of the transboundary flows, defined as starting and / or ending in national transport systems, are determined on the basis of physical electricity flows that have been measured over a period of time.


22. Article 57 – TSOs and DSOs shall start coordinating work on network technical parameters, changes in consumption and generation patterns, peak load interactions, and balancing the wholesale and retail electricity markets. This includes: development and engagement based on the analysis of transmission networks and the distribution of technical solutions regarding the possibilities of reconfiguration of energy flows, including reactive electricity for the purpose of balancing the grid; development and coordination of tariff solutions to harness the potential of flexibility through pricing mechanisms that would facilitate generation and demand regulation by time, transmission directions, required capacities and regions; finding and using market-based mechanisms to harness the hidden potential of flexibility in managing energy flows in all directions; identification or introduction of contractual terms and conditions for cooperation with users of transmission and distribution networks on balancing issues through voluntary change of demand mode at the operator’s request; preparation of a list of constraints based on network codes for emergencies and last resort provider interaction.



EU electricity transmission system operators are starting to implement the standards described in the above-mentioned acts of EU legislation from January 2020. The main areas for cooperation will be the expansion of cross-border networks, the integration and interaction of national trading areas in organized market segments – bilateral agreements, the day-ahead market and the intra-day market. Taken together, the aim is to offset prices in the wholesale electricity market and promote the development of renewable energy. The latter will enjoy the right of access to interstate networks in order to avoid congestion in national networks and excessive fall in prices in the wholesale market, especially Germany, Austria, Scandinavian countries. At the same time, the flows of such electricity will be uneven in nature, which will require additional high-maneuverability generation or demand management capacity.

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