The ongoing transformation of the electricity industry, with the development of decentralised generation, storage, smart grids and active consumer participation, along with the implementation of the Internal Energy Market (IEM), are having a significant impact on the functioning of the European power system – and more specifically on system operations, according to the report ‘Options for the Future of Power System Regional Coordination’ published by the European network of transmission system operators for electricity ENTSO-E in December.
With the growing penetration of intermittent renewables and the subsequent changes in the generation mix, market participants are optimising their portfolios closer to real time and increasingly trading across borders, the report states. Consequently, the different generation patterns, in combination with extensive trading, are leading to increasing power flows across Europe, creating challenges for system operators and market trading in some parts of Europe due to significant unscheduled (loop and transit) flows.
The report notes that to reach a sustainable and long-lasting solution it will be necessary to make improvements to market design, accompanied by the relevant development of the transmission infrastructure needed to sustain the level of renewables. As far as market design is concerned the first step, already anchored in the Capacity Allocation and Congestion Management (CACM) network code, is the implementation of coordination of capacity calculation on the borders of appropriately defined bidding zones, which may help to better use the limited grid capacities.
Regarding transmission development, there are plans to reinforce existing infrastructures, with EUR 150 billion of planned investment across Europe over the next decade. However, these infrastructure developments are often slowed down by local opposition which generates delays and additional costs, or even sometimes the cancellation of projects.
Given the profound and rapid transformation of the electricity industry and of the IEM, the European Commission is considering the future of system operation, in order to foster cooperation at the regional level. In this context, ENTSO-E has commissioned an independent study to analyse potential practical options for the future of system operation regional coordination in the next decade, with the objective of looking beyond the System Operation Guideline (SOGL) and identifying a number of practical recommendations to enhance regional cooperation.