Capacity allocation rules for MONITA power cable approved - TSO

Author: Federica Di

2019/11/21

LONDON (ICIS)--Cross-border capacity allocation rules for the 600MW MONITA power cable linking Italy and Montenegro have been approved by Italian transmission system operator (TSO) Terna.

However, it is still unclear when the first cross-border auctions will take place, thus marking the start of commercial flows.

Both daily and forward capacity rules were approved by Terna on Thursday in response to the legislation adopted by the Italian regulator ARERA together with its Montenegrin counterpart REGAGEN.

The Coordinated Auction Office in South Europe (SEE CAO) will be responsible for holding auctions for the first two years from the lunch of commercial flows. Then the Joint Allocation Office (JAO) is meant to take over from 2022 onwards.

The rules for forward capacity will apply for delivery period starting from 1 January 2020, according to the document. Auctions for forward capacity can still be organised beforehand.

When it comes to daily capacity allocation, the rules would apply for the delivery period starting from the date announced by SEE CAO. The platform is yet to make such an announcement.

At the beginning, day-ahead auctions will be explicit, but they can become implicit at a later stage when Italy and Montenegro eventually initiate market coupling.

This means that the capacity and the electricity will eventually be sold jointly. Montenegro is expected to launch its own day-ahead exchange next year.

A STALEMATE PERSISTS

Uncertainty over the auctions’ starting date remains despite the official launch of the cable on 15 November.

Although SEE CAO has already published the auction specifications for yearly capacity for the calendar year 2020 due to take place on 25 November, capacity between Montenegro and Italy does not appear there. This could mean that SEE CAO may organise a separate auction at a later stage.

Persisting uncertainty regarding the timing of the first cross-border auctions means the cable will remain underutilised for the time being. International companies interested in buying capacity on the cable would also need time to register with SEE CAO.

Separately, according to a source close to the matter, SEE CAO had been waiting for a binding document from Terna confirming the terms of the agreement, before auctions can commence. The publication of the latest capacity allocation rules suggests that preparations are underway.

Participants will be able to book 400MW cross-border capacity on the cable through short-term and long-term auctions, while the remaining 200MW will be reserved for Italian energy-intensive industrial consumers who partially funded the project.