Efficient Use of Transmission Capacity for Cross-Border Trading: Available Transfer Capacity versus Flow-Based Approach

The European Union strives towards an integrated European electricity market. Achieving this objective while preserving a zonal pricing approach in combination with market coupling, requires an efficient cross-border transmission capacity calculation and allocation mechanism. In this context, a new flowbased algorithm is developed in the CWE region for the dayahead time frame. The idea is to accurately take into account the impact each trade has on the grid by translating cross-border contractual exchanges into physical flows. This paper compares this flow-based approach to the conventional ATC mechanism for the four steps that can be distinguished in the daily cross-border coordination process. To this end, market reports concerning the operation of the flow-based method are studied. While flow-based market coupling is beneficial to ATC from a theoretical point of view, operational challenges before, during and after market coupling are identified. These have to be considered as well in assessing the overall improvement of flow-based compared to ATC.status: publishe