Avoiding undue discrimination in transmission capacity calculation and allocation
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Siirtokapasiteetin jakaminen markkinatoimijoille
European Union legislation on transmission capacity allocation and congestion management thrives to achieve fair and consistent treatment for European market participants. A lack of sufficient and coordinated methods to handle internal congestions in capacity calculation and allocation reduces given transmission capacity to the market. This leads to inefficient market and undue discrimination between market participants depending on location of internal congestions. Challenge is noticed in Finnish congestion management when production is shifting towards north whereas most of the consumption is located in south. Improved methods should consider socio-economic impacts and treat market participants without undue discrimination. This master thesis discusses transmission capacity calculation between internal and cross-zonal trade including rules to avoid undue discrimination. Developed method improves currently used congestion management practices by estimating market impacts of capacity reduction during internal congestions in European market area. Congestion management during capacity calculation is realised either with redispatching or cross-border transmission capacity reduction. A decision between these methods is depending on which method shows lower socio-economic costs and higher market efficiency. Socio-economic impacts of reduced transmission capacity were estimated based on market information gathered from years 2016–2017. Results show that socio-economic impact for reduced cross-zonal transmission capacity is averagely within 15–45 €/MWh during congestion while the majority of values are within 20–30 €/MWh indicating lower values than average Finnish day-ahead market price. Most of market impacts occur in Finnish bidding zone, respectively capacity changes influence Swedish and Baltic State bidding zones. Highly volatile redispatching costs were estimated subject to balancing market prices due to relatively low quantity of historical redispatching measures. When comparing costs between capacity reduction and redispatching, results conclude socio-economic justification of redispatching especially below 100 MW congestions in all price ranges due to similar or even lower costs than capacity reduction. Above this, relieving congestions based on absolute costs of required actions and therefore, congestions within 100–200 MW are generally relieved with redispatching if reasonably priced resources are available. During even higher congestions, the availability of redispatch should be considered and capacity reduction is justified.