New allocation rules for long-term cross border capacity rights


The CWE zone is launching new allocation rules for long-term cross-border capacity rights for products delivered as of 1 January 2016. This dovetails with a European pilot project to harmonise the rules on allocating all long-term cross-border transmission capacity.

For products with delivery date as of 1 January 2016, the rules for allocating long-term cross-border transmission capacity in the CWE zone (Belgium, Netherlands, France and Germany) will change. Harmonisation of the allocation rules for long-term cross-border transmission capacity is one of the requirements of the upcoming new European Grid Code for Forward Capacity Allocation. These are rights which market players can buy via explicit auctions organised by the Joint Allocation Office (JAO) for the CWE region. The Joint Allocation Office is the organisation which, on behalf of 20 system operators, organises the auction of transmission rights at 27 borders in Europe.

In anticipation of this, the European system operators – which include those in the CWE zone (Tennet, Amprion, RTE, Transnet, Elia) – have already started harmonising the allocation rules for long-term transmission rights. These new allocation rules apply to products delivered on or after 1 January 2016. The market players have already been informed and can monitor their current status on the website of ENTSO-E (the association of European transmission system operators), the joint allocation platform (JAO) and via the relevant system operators.

These changes entail a number of practical consequences for the market players, which must now, among other things, conclude a new agreement with the allocation platform. This also means that the current system of ‘physical’ long-term capacity rights, with an option to actually use them or to offer them for sale on the day-ahead market, will no longer apply at the French-Belgian border or Dutch-Belgian border. At these borders, only ‘financial’ long-term transmission rights will be offered. These will once again be available on the day-ahead market and will entail compensation in the event of a positive price difference.

These new allocation rules therefore mean that the annual capacity on the Dutch-Belgian border for products applicable as of 1 January 2016, will be offered to the market players in a single auction, and not in two annual auctions as was previously the case.

For more details, we refer to the communication with the market players.