Reform of transmission capacity calculation

Transmission capacity calculation refers to the determination of the transmission capacity to be made available to the electricity market, taking into account the power system’s technical constraints and system security.

European legislation (the Capacity Allocation and Congestion Management (CACM) Guideline) requires transmission system operators to calculate transmission capacity in a coordinated way. In the Nordic region, this means that the Nordic Regional Coordination Centre (RCC) based in Copenhagen will calculate transmission capacity for the Nordic transmission system operators. The transmission system operators will provide the RCC with the input data required to calculate transmission capacity and confirm the transmission capacities calculated by the RCC.

The method for calculating the transmission capacity is currently being reformed. The Nordic region will implement a flow-based capacity calculation method, firstly in the day-ahead market and later in the intraday market. The flow-based method offers the advantage of more precise consideration of the transmission grid, thereby increasing economic efficiency in the transmission capacity allocation phase. The flow-based method will be implemented in the day-ahead market in 2024 at the earliest. Before the implementation, the flow-based method will be tested in parallel runs with the existing net transmission capacity (NTC) method to calculate transmission capacities every day for at least one year. The aim of the parallel runs to increase understanding of the new method and verify that it functions properly.

Impacts of the flow-based method on market participants

The effect of the flow-based method on electricity producers, consumers and other market participants will be that transmission capacities are no longer stated at bidding zone borders as they are today. Instead, as a result of capacity calculation, the available capacity will be stated for each critical network element, which may be within bidding zones or at bidding zone borders. In addition, a matrix will be published, which describes the dependencies between critical network elements and the flows between bidding zones. Market participants will continue to submit bids at the bidding zone level, just as they do now.

The flow-based method may seem complex and difficult to understand. In Fingrid’s view, it is important to ensure the transparency of the information published related to capacity calculation to help all parties understand the new method and ensure that it is an improvement compared to the existing capacity calculation method. Fingrid invites stakeholders to give feedback on the transparency and understandability of the flow-based method and the results of the parallel runs.

More information on the flow-based method is available on the Nordic RCC website.