Power Grid

23 Jun 2021

Austrian Power Grid: The Electricity Market is Becoming more European

23 Jun 2021  by   

Behind the awkward word “market coupling” lies the endeavor to create a coherent European internal market for electricity. “We want to use market coupling to connect the various bidding zones in Europe and standardize the rules of the game in international electricity trading. This is important because it reduces price differences and it becomes cheaper for all electricity customers in Europe at the end of the day, ”says Thomas Karall, Commercial Director of Austrian Power Grid. On June 17, 2021, a further step towards standardizing the electricity market was achieved with the help of APG. The electricity markets of the former "Central Eastern Europe" region were linked to the rest of Europe after several years of preparatory work. The Czech Republic, Slovakia, Hungary and Romania are now integrated into all European processes for capacity allocation. “By coupling the electricity markets, capacities do not have to be auctioned first, as was previously the case, in order to be able to subsequently trade electricity across borders, but are implicitly allocated by the electricity exchanges. In this way, capacities can be used more efficiently, more transparently and faster by means of market mechanisms. For market participants, this will make cross-border electricity trading much easier, ”says Karall happily.

Central role in market coupling

For geopolitical and technical reasons, APG plays a central role in the implementation and is the front runner in the implementation of market coupling in Europe. Due to the direct borders with the neighboring countries Hungary and the Czech Republic, Market Coupling was implemented at two borders, thereby replacing the old processes of explicit daily auctions. The company has already implemented market coupling processes for the allocation of cross-border capacities at the borders with Germany, Italy and Slovenia and has therefore been able to fall back on many years of experience. Karall: “The electricity markets are becoming more and more European. It is important that we actively help shape European market integration. The connection of our eastern neighbors to the coupled European electricity market is a milestone in European market integration ”. A better connection between Austria and neighboring electricity markets optimizes the trading opportunities for Austrian market participants and supports liquidity on the Austrian wholesale market.

The preparatory work took around two and a half years. A total of 16 parties were involved in the implementation (8 TSOs and 8 electricity exchanges from Austria, Germany, Poland, the Czech Republic, Slovakia, Hungary and Romania.) The Austrian day-ahead market is now on all borders (with the exception of Switzerland) with the coupled to European markets.

Available grid capacities are the key to the European electricity market

In order to be able to participate in all major developments in the European electricity market in the future, as well as to harness the potential of the European energy transition and the electrification of business and industry throughout Europe, a high-capacity transmission network and the use of state-of-the-art technologies are required. “With our investment program of 3.1 billion euros over the next ten years, we are laying the basis for the sustainable implementation of market mechanisms, the energy transition, and the electrification of industry and business. At the same time, we are also investing this money to integrate business and industry in order to use their flexibilities by means of digital platform technologies. This creates the basis for a modern and sustainable business location and the basis for a secure transformation of the energy system, ”says Karall.

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