The Nordic NRAs find that the Nordic TSOs in the external parallel runs (EPR) report have demonstrated that the flow-based (FB) capacity calculation works sufficient in operational terms, given the current state of development. However, the Nordic NRAs conclude that there are still open issues beyond the key performance indicators (KPIs), and the Nordic NRAs request the TSOs to investigate and elaborate on those issues in more details during the upcoming 6-months of EPRs.
On June 12, 2023, the Nordic NRAs received from the Nordic TSOs a report on the results and elaborations from the EPRs of the FB capacity calculation methodology.
Background
The EPR report is part of the process of implementing a FB capacity calculation methodology, which, in accordance with the CACM Regulation, was proposed by the Nordic TSOs in 2017. The Nordic NRAs approved the methodology in 2018, and it was amended in both 2019 and 2020. As part of the approval process in 2020, the Nordic NRAs decided to have a checkpoint, before the remaining 6 months of EPRs will take place.
The purpose of this EPR report is to provide the Nordic NRAs with information to facilitate the implementation process of the approved methodology. This checkpoint is intended as a tool for the NRAs to ensure that the FB capacity calculation is working sufficiently well at an operational level in accordance with the approved methodology. The EPR report has also the purpose to keep relevant stakeholders informed on the implementation processes ahead of the go live. To do so, the Nordic NRAs established a set of KPIs, which the TSOs were obliged to follow in the EPR report.
Remarks to the June 2023 EPR report
In order to ensure a successful implementation and further improve the understanding of the methodology, the Nordic NRAs note that the TSOs should provide clear communication and full transparency on the results of the EPRs.
Nordic NRAs note that there are still many questions from the stakeholders, which have not yet been fully answered. The Nordic NRAs emphasize the importance for the TSOs to follow up on all stakeholders’ FB related questions and remarks.
The results in the EPR report show that the FB methodology produces results that differ notably compared to the current application of NTC in several aspects. The change from NTC to the FB methodology will therefore affect all stakeholders in the Nordic market as well as import and export capacities from the Nordic region and other countries. The level of impact the change from NTC to the FB methodology seems to have on final consumers’ electricity bills further imply that the TSOs must continue to be cautious and examine all details in the months to come.
To provide increased learning about the concrete impact of the transition to the FB methodology, NRAs expect TSOs to provide clarification and explanation of the EPR results on an hourly basis as outlined below:
- What results relate to the TSOs’ current NTC practice and what relate to the features of the new methodology? This issue applies to the ATCE results in the intraday market as well as to the FB results in the day ahead.
- Hours of particular interest should be highlighted, and the results explained in light of specific conditions within the operational hour, where relevant.
- In order to provide increased understanding of the comparison of welfare during the EPRs, the TSOs should elaborate on their costs of countertrading or redispatching, which they have incurred by the current NTC practice, and which would not apply to the new methodology.
- TSOs should clarify to what extent the EPR results relate to issues in the concrete modelling of FB or of ATCE.
- NRAs have noted concerns from the stakeholders regarding the handling of the ATCE capacities at go live on some borders given non-intuitive flows in DA. More clarification is needed by complementing the EPR results with additional analysis that looks specifically at these concerns.
Moreover, NRAs have taken note of the unanimous stakeholder concern about the lack of transparency related to CNEs in SvKs’ network throughout the EPR process as well as in their comments to the EPR report. This transparency issue is due to SvK’s practice of anonymization of CNEs, without stable identifier. NRAs’ foresee that SvK will see to that their practice on publication of CNEs will be compatible with art. 25(5) in the CCM.
Further implementation process
The upcoming EPRs will be important in providing both TSOs and stakeholders with additional necessary information and learning before going live. Given the substantial changes seen in the price formation on the day ahead market, the Nordic NRAs find it important that TSOs continually and transparently, evaluate the outcome of the operational implementation process with the approved methodology. Furthermore, the Nordic NRAs request the TSOs to extensively communicate the progress to the Nordic NRAs and the stakeholders during the upcoming months of EPRs, both via regular stakeholder seminars and in meetings with the Nordic NRAs.
Thus, the upcoming months of EPRs shall provide the stakeholders and Nordic NRAs confirmation that the FB capacity calculation methodology and ATCE is ready to go live.
Furthermore, the Nordic NRAs emphasize that the Nordic CCM will be further amended in the years to come. We foresee that amendment processes on the CCM will be one of TSOs and NRAs’ regular tasks. Stakeholders’ comments will be valuable inputs to these processes. Finally, the Nordic NRAs stress that the analyses of the FB methodology itself should continue during the process of FB implementation to detect improvements to the methodology. The Nordic NRAs recognize the importance of stakeholder involvement in this process.