Cross-border capacity lying idle

GERMANY: As the German experience has shown, opposition to change can slow progress and raising cross-border capacity will not help if it is not used efficiently.

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An electricity sector report released in mid-January by Germany's federal cartel office points out that, although Germany's available transmission capacity for power imports in 2007 was 18GW, according to Entso-e figures, net imports in any one hour of that year never exceeded 6.6GW - which means that just over one-third of the available transmission capacity was used.

"It can be assumed that in individual hours there was a sufficiently large economic incentive for import capacity to Germany to be fully used." Failure to use it all, says the report, is "an indication of considerable friction to prevent full use of available net transfer capacity".

The recent introduction of complex market-coupling systems in north-western Europe aims to make the use of cross-border connections more efficient. But so far, the coupling applies only to transmission capacity made available for next-day delivery of electricity and only for electricity traded on energy exchanges.

Longer-term allocations of blocs of cross-border transmission capacity through yearly, monthly or weekly auctions that take place in many countries - for instance to serve bilateral trade of electricity between companies on each side of a national border - can prevent optimal flow of power if the capacity is not used and not made available to other market players.

There is also a danger, warns Germany's energy exchange EEX, that transmission system operators may misuse their key role in market coupling by distorting prices either as purchases or sellers on the markets. They could also attempt to solve grid congestion within their country by influencing prices in different market areas, it points out.

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