Regional Focal Points: a new structural unit in the European electricity market

The package of legislative initiatives Clean Energy for All Europeans (the Fourth Energy Package) was adopted by the EU in mid-2019. Despite the change in the composition of the European Commission, the transition to a new energy future is one of the priorities of the cabinet of Ursula von der Leyen. Clean energy, climate issues, strengthening the role of prosumers, energy efficiency, a new design of the electricity market, the development of R&D, the security of energy supplies – these and many other goals are shaped in the Fourth Energy Package.

One of the innovations of the Clean Energy for All Europeans package has been the creation of Regional Focal Points (RFPs), which will start functioning on July 1, 2022 and replace the existing Regional Security Coordinators, but at the same time will slightly expand their functionality compared to the latter.

The idea of ​​cooperation is not new to European TSOs. The impetus for coordination was the event that took place on November 4, 2006. Then, after a planned power outage in Northern Germany, at least 15 million households across Europe were without electricity. It became obvious that operators needed to exchange certain information 24/7, as well as develop a regional vision for the European grid. In response to this event, in 2008 TSOs created the first regional network collaboration organizations – Coreso in Brussels and TSC in Munich.

NOTE: At that time, system operators in Belgium, Germany, France, Luxembourg and the Kingdom of the Netherlands coordinated their activities. Between 2009 and 2016, Coreso was joined by system operators of the UK, Italy, Portugal and Spain. In turn, TSC partially united the operators of Germany, Austria, Switzerland, Central and Eastern Europe, as well as Croatia, Slovenia and Romania.

The first such associations were called Regional Security Coordination Initiatives, which were later renamed as Regional Security Coordinators, because their main task was to achieve network security through coordinated actions of TSO.

In 2015, a similar association was formed in Southeast Europe, with a center in Belgrade, and in 2016 the Scandinavian countries announced the need to create their own Regional Security Coordinator, which later became known as Nordic RSC, located in Copenhagen. In the same year, a Baltic Regional Security Coordinator (Baltic RSC) appeared in northern Europe, which included Latvia, Lithuania and Estonia.

The next step in deepening coordination, which, in fact, is introduced by the regulations of Clean Energy for All Europeans, is the creation of Regional Coordination Centers.

Unlike their predecessors, RFPs will be independent of the transmission system operators, and therefore also of the influence of individual national interests. But the focal points will concentrate on the needs of the regional scale for the organization of the market and energy systems. Consequently, they will coordinate the activities of the TSO within one region.

So, RFPs will have 5 main tasks:

  • calculation of available capacities in the region of TSOs associations (sufficiency (adequacy) plans)
  • monitoring of compliance with the implementation of safety standards and network operation;
  • creating a database (common grid model)
  • short-term (one day ahead and one week ahead) forecast of the adequacy of generating capacities;
  • coordination of TSOs’ plans for outages in the region of responsibility.

Based on the results of their activities, the RFPs will develop action plans and recommendations for operators to improve the work and enhance the security of the regional network. It should be noted that action plans are mandatory, unless the implementation of the latter may lead to a breach of operational security defined by the TSO network codes. But as for the recommendations of the RFPs, they are advisory. If the Operator decided to evade the implementation of the latter, then it is enough to provide explanations of its actions to the focal point and other TSOs in the region.

The RFPs’ activities are based on democratic principles, for example, the operator may contact the focal point with a request to review the action plan or recommendations. Focal points should respond to such an appeal, review plans or recommendations, make adjustments, or investigate a problematic issue more deeply.

The most interesting thing is that a significant part of the tasks of creating focal points is assigned to TSOs. So, proposals for the creation of RFPs are developed by the Operators and should cover at least the following issues: the potential location of the focal point and the list of participating operators; organizational, financial and operational mechanisms for ensuring the work of the RFP, determining the mechanism of cooperation between the centers and others. In addition, a representative of each Operator will be on the board of the respective RFP. If the TSO control zone is part of various synchronous areas, then the operator can enter two RFPs simultaneously.

For example, the first steps have already been taken to create a Regional Coordination Center in Southeast Europe. So, on July 12 last year, three operators – ESO (Bulgaria), IPTO (Greece) and Translectrika (Romania) – signed a Memorandum on the establishment of a Regional Coordination Center and are already working on a concept for its activities. The Greek city of Thessaloniki was determined to be the location of the RFP of Southeast Europe by agreement of the parties. According to the Directive on the General Rules of the Internal Electricity Market (the EU) 2019/944, it is expected that at the beginning of July of this year, Operators present their vision of the number and location of future RFPs.

The importance of the issue for Ukraine. In the coming years, Ukraine, as the EU associate partner through the Energy Community, will be obliged to implement the basic norms of the Fourth Energy Package. This means that we should already look at the process of forming Regional Focal Points and monitor what our neighbors from the Visegrad Group are doing in this direction. To recap, the island of Burshtyn TPP is already synchronized with ENTSO-E and has regular trading operations with Hungary and Slovakia.

Given Ukraine’s desire to integrate into the EU energy markets, it is important to keep abreast of the innovations that take place in the Union’s energy policy. Therefore, taking into account the planned entry of Ukrenergo into the European network of transmission system operators (ENTSO-E) and synchronization of networks in 2023, the activities of the new regional focal points will largely affect the Ukrainian transmission system operator. Now in the Fourth Energy Package it is not determined what status TSOs have in Regional Focal Points operating outside the EU. However, now it is necessary to take into account the possible configurations of these RFPs, as well as the principles of their work. 

Ukraine may initiate a pilot project for the creation of an RFP between TSOs from EU member states and an associate member. And thereby secure a voice in the formation of a regional policy for the use of electric power transmission grids and promote the development of relations with European partners.

Tags: contracts, legislation, electricity, EU, energy market, Ukrenergo, feed-in tariff, ETL, electricity market, foreign affairs, renewables, energy storage, Ukraine, agreement, infrastructure, energy sector, innovations, technologies, electricity transmission, transmission system operator, balancing market, intraday market, ENTSO-E, Kyiv

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