Commission accepts German-Austrian power zone split deal – for now

23 June 2017 17:13 Source:ICIS

The European Commission has accepted a recent agreement between Germany and Austria on the split of their common power bidding zone, but only as a temporary fix until a wider arrangement of zones in the EU has been agreed.

The agreement looks set to be implemented, with the split to take place on 1 October 2018, even though Eastern European regulators have hit out at it.

Eastern European states want the zone split to happen to reduce transit flows that serve German-Austrian trade via their territories ( read ICIS Briefing here on German-Austrian bidding zone split ).

However, the split arrangement that German and Austrian regulators agreed last month will only marginally reduce trade between the two countries, with at least 4.9GW of commercial cross-border capacity still to be available ( click here to read story ).

Regulators in the Czech Republic, Hungary, Poland and Slovakia said the capacity seems unreasonably high and the German-Austrian agreement does not meet EU standards due to a lack of transparency and a lack of coordination with other affected countries.

The European Commission said it welcomed that Germany and Austria have reached agreement on the split, although this cannot replace the need for a coordinated regional solution in the long run, a commission source told ICIS.

“Agreements between member states on capacity calculation can provide important clarity for the interim period, until coordinated regional capacity calculation within a European legal framework is finalised,” she said.

Regional fix

It is unclear when a regional solution could be approved, although the process of reviewing EU bidding zones has started, based on the network code on capacity allocation and congestion management adopted in 2015.

A study commissioned by the European Network of Transmission System Operators for Electricity (ENTSO-E) about optimal bidding zone configuration should be released soon.

“Existing legislation already provides for a solid technical process to determine the optimal bidding zone configuration in the EU,” the commission source said. “However, there are no clear provisions at the moment that would determine how this technical process translates into decision-making.”

The commission has proposed that it will have the final say about the configuration of bidding zones, she said.

Interim solution

Germany and Austria are consulting with neighbouring states about their agreement, but do not need any further approval to implement it, a spokesman for German regulator Bundesnetzagentur said.

The two countries consider their agreement to be in line with the EU network code on capacity allocation and congestion management, he said.

Austrian regulator E-Control expects the cornerstones of the agreement will be implemented, although there are talks with other stakeholders to achieve better mutual understanding and coordination, a spokesman said.

ACER is pleased the agreement reflects its view that the zone should be split, an agency spokesman said. But it does needs to be implemented in close cooperation with other regional stakeholders, he agreed.

By Laura Raus