The flow-based market coupling model increases the price convergence in Central West Europe while ensuring a same security of supply level as today.
The Memorandum of Understanding (MoU) of the Pentalateral Energy Forum (PLEF) in Central West Europe (CWE) was signed on 6 June 2007 by the governments, regulators, transmission system operators, power exchanges and electricity associations of Belgium, France, Germany, Luxembourg and the Netherlands. The MoU aims to improve security of supply and foster the analysis, design and implementation of flow-based market coupling between the five countries of the CWE region.
CWE market coupling based on available transfer capacity (ATC) was launched as an intermediate step on 9 November 2010. This replaced trilateral market coupling (TLC) and connected the CWE region to the Nordic countries through Interim Tight Volume Coupling (ITVC). In the CWE region, the ATC model was viewed as a step on the way towards the flow-based model. The first CWE flow-based market coupling took place on 20 May 2015.
The flow-based model has been advocated as the target model for highly meshed grids (like the Central West Europe grid).
Market coupling allocates capacity by optimising the total economic surplus of the different coupled spot markets’ order books, while ensuring that the physical limits of the grid are respected. The consequence of this is price harmonisation in the CWE region when sufficient capacity is available. By using a more detailed grid description, the flow-based method increas this price convergence while ensuring a same security of supply as today.
9 parties were involved in the CWE flow-based project:
- 2 power exchanges (APX-Belpex and EPEX Spot);
- 7 transmission system operators (Amprion, Creos, Elia, RTE, TenneT Gmbh Tennet B.v and Transnet BW).
An overview of the major principles underpinning the method for calculating and allocating flow-based capacity, as developed in the CWE (Central Western Europe) region, as well as the concept changes compared with the past method based on ATC (Available Transfer Capacity) at borders is given in this document.
More information on the CWE flow-based methodology can be found on CASC website or in the documents listed below: