Abstract
Long-term transmission rights promotes competition, fosters investment of new entrants facilitating, in this way, the efficient renewable deployment across the EU member states, and helps the efficient use of interconnectors. However, EU regulations only require long-term transmission rights of up to one-year term. The lack of longer term transmission rights appears to be inconsistent with the twin EU goals of electricity markets integration and ambitious renewable target. Other countries experiences show that longer term transmission rights are viable and proved to be important for promoting investment efficiency and market competition. In addition, longer term financial transmission rights provides information about the need of interconnection investment.
Highlights
The EU energy transition and the ambitious renewable targets for reducing emissions will make market integration and cross-border electricity transfers even more important
The Reports of the Expert Group on Interconnection Targets, in particular the first and fourth reports, show that large cross-border transmission investment will be needed to accommodate the deployment of low carbon generation
The maximum term of EU cross-border transmission rights is only of one year. Such short long-term transmission rights interferes with the appropriate working of the forward electricity markets
Summary
The EU energy transition and the ambitious renewable targets for reducing emissions will make market integration and cross-border electricity transfers even more important. If a party wants to hedge prices across bidding zones, long-term cross-zonal transmission rights need to be acquired separately. Such party can only find hedging tools for one year. A party in a EU market wishing to hedge prices of the electricity generated by a new green investment across bidding zones is likely to give up such investment due to lack of hedging options. This lack of long-term transmission rights is inconsistent with the goal of a EU single electricity market and with any ambitious renewable targets.
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
