Allocation of long-term transmission rights

PSE S.A. offers long-term cross-zonal capacities on annual and monthly time frames which are allocated to market participants in explicit auctions coordinated by Joint Allocation Office SA (JAO). Long-term cross-zonal capacities are offered on the so-called ’technical profile‘, which involves Poland-Germany, Poland-Czech Republic, Poland-Slovakia interconnectors.

Rules for allocation of the long-term transmission rights (LTTRs) are described in the harmonized allocation rules (‘Harmonized allocation rules for long-term transmission rights’),which were developed in accordance with Article 51 of the Commission Regulation (UE) 2016/1719 (the Forward Capacity Allocation Regulation, FCA). Allocation of LTTRs is performed with the use of the single allocation platform operated by JAO.

Cross-zonal capacity offered in yearly and monthly auctions are determined by outcomes of analyzes based on procedure and parameters described in Annex 1 of the Polish grid code – ‘Instrukcja Ruchu i Eksploatacji Sieci Przesyłowej (IRiESP), Bilansowanie systemu i zarządzenie ograniczeniami systemowymi’.

See more:
Auctions | JAO
Auctions Rules-JAO (HAR)

Physical transmission rights and financial transmission rights

According to the FCA Regulation, there are two types of long-term transmission rights: physical transmission rights (PTRs) and financial transmission rights (FTRs).

PTRs are directly related to the physical cross-zonal capacities and entitle its holder to physically transfer a certain volume of electricity between two neighboring bidding zones. This means that nominated PTRs (i.e. used by providing electricity exchange schedule to TSO by its holder) cannot be offered on the short-term markets. PTRs holders may declare if they are going to nominate their allocated transmission rights fully or partially. Not nominated PTRs are made available for the short-term markets according to the ‘use-it-or-sell-it’ principle. A PTRs holder who chooses not to nominate their allocated transmission rights is entitled to receive financial compensation. The amount of this compensation is based on the product of price spread from day-ahead market and volumes of non-nominated PTR between two bidding zones during a specified period of time in a specific direction.

FTRs cannot be nominated as they are not related to physical cross-border capacities. Holders of FTRs type options are hedged against price spreads between two bidding zones by giving the right to receive the same financial compensation as in case of non-nominated PTRs.

Starting from the go-live of the Core Flow-based Day-ahead Market Coupling project long-term cross-zonal capacity on the Polish interconnectors are allocated to market participants in the form of FTRs.

See more:
Comission Regulation (UE) 2016/1719 (FCA)

LTTRs on the technical profile

In order to optimise the utilization of cross-border interconnections and allocate LTTRs in the most efficient way, the long-term cross-zonal capacity is offered using a technical profile.

Technical profile is a set of cross-border interconnections having one common technical limit for commercial transactions carried out over bilateral interconnections. Each TSO applying technical profile determines individually technical limit of available LTTRs concerning its cross-border interconnections that are then offered by JAO in allocation process.

PSE S.A. determines long-term cross-zonal capacities for the technical profile connecting the Polish power system with the systems of Germany, Czech Republic and Slovakia. Interconnectors and technical profiles are represented in the below scheme where blue arrows and red lines indicate interconnectors and technical profiles respectively.

The allocation process is performed within explicit auction, in which market participants submit their bids for reservation of LTTRs for given interconnector. The submitted bids compete not only with each other but also with bids submitted for other interconnectors within the same technical profile. Allocation process is continued until the limits of transfer capacities for each technical profile (which are limiting conditions) are met by accepted bids with the highest price.