Derogation request of APG

from the obligation under Article 16(8) pursuant to

Article 16(9) of Regulation (EU) 2019/943 of the
European Parliament and of the Council of 5 June
2019 on the internal market for electricity for the
Capacity Calculation Region Core

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Introduction

(1) In accordance with Article 16(8) of the Regulation (EU) 2019/943 of the European
Parliament and of the Council of 5 June 2019 on the internal market for electricity
(“Regulation 2019/943”) transmission system operators shall not limit the volume of
interconnection capacity to be made available to market participants as a means of solving
congestion inside their own bidding zone or as a means of managing flows resulting from
transactions internal to bidding zones. The minimum levels of available capacity for cross-
zonal trade are reached:
 for borders using a coordinated net transmission capacity approach, the minimum
capacity shall be 70 % of the transmission capacity respecting operational security
limits after deduction of contingencies, as determined in accordance with the capacity
allocation and congestion management guideline adopted on the basis of Article 18(5)
of the Regulation 2009/714 (EC) of the European Parliament and of the Council of 13
July 2009 on conditions for access to the network for cross-border exchanges in
electricity and repealing Regulation (“Regulation 2009/714”).
 for borders using a flow-based approach, the minimum capacity shall be a margin set
in the capacity calculation process as available for flows induced by cross-zonal
exchange. The margin shall be 70 % of the capacity respecting operational security
limits of internal and cross-zonal critical network elements, taking into account
contingencies, as determined in accordance with the capacity allocation and
congestion management guideline adopted on the basis of Article 18(5) of the
Regulation 2009/714.

(2) However, in case a transmission system operator cannot comply with the minimum
capacity of 70 % to be made available to market participants due to operational security
risks on foreseeable grounds, such transmission system operator may request from the
relevant regulatory authorities a derogation from Article 16(8) of the Regulation 2019/943.
The extent of such derogations shall be strictly limited to what is necessary to maintain
operational security and they shall avoid discrimination between internal and cross-zonal
exchanges. Before granting a derogation, the relevant regulatory authority shall consult the
regulatory authorities of other Member States forming part of the affected capacity
calculation regions. In absence of an unanimous decision by the regulatory authorities such
decision is incumbent upon ACER.

(3) ACER issued a Recommendation (No. 01/2019), published on 09 August 2019, describing a
unified way on how to monitor the capacities made available to the market in relation to
the 70% target for all considered timeframes and all coordination areas.

(4) In accordance with the Regulation (EU) 2015/1222 of 24 July 2015 establishing a guideline
on Capacity Allocation and Congestion Management (“CACM Regulation”) and the
Regulation (EU) 2017/1485 of 2 August 2017 establishing a guideline on electricity
transmission system operation (“SOGL”), TSOs are required to develop and deliver the
proposals on the methodologies in which the essential elements related to the coordinated
capacity calculation and coordinated usage of non-costly and costly remedial actions are to
be defined. The following methodologies have to be submitted by TSOs from the same
Capacity Calculation Region (“CCR”):

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 a. The Capacity Calculation Methodologies for the Core CCR as referred to in Article
21 of the CACM Regulation (“Core CCM”).
b. The Coordinated Redispatching and Countertrading Methodology for the Core CCR
as referred to in Article 35 of the CACM Regulation (“CACM 35”).
c. The Redispatching and Countertrading Cost-Sharing Methodology for the Core CCR
as referred to in Article 74 of the CACM Regulation (“CACM 74”).
d. The operational security coordination methodology for the Core CCR as referred to
in Article 76 of the SOGL Regulation (“SOGL 76”).

(5) APG is operating the Austrian transmission system for electricity and therefore is ensuring
the trans-regional national exchange of electricity as well as the exchange with
neighbouring countries between generators and consumers. APG has been certified as
Independent Transmission Operator on 12 March 2012.
Essentially, the present request refers to the obligation deriving from Article 16 (8) of the
Regulation 2019/943 which applies to APG in its role as transmission system operator from
01 January 2020.

(6) After having performed the first preliminary analysis on the concepts of ACER’s
Recommendation (No. 01/2019), APG cannot conclude with a reasonable certainty
whether the cross-zonal capacities could meet the requirement defined in Art 16(8) of the
Regulation 2009/714, as of 01 January 2020 due to the following reasons detailed in the
provisions below and therefore issues this request for a derogation.

(7) Against this background and pursuant to Article 16 (9) of the Regulation 2019/943, APG
files the following request for the grant of a derogation from the obligations laid down
under Article 16 (8) of the Regulation 2019/943 in relation to the bidding zone borders
AT/DE, AT/CZ, AT/HU and AT/SI.

Article 1 Subject Matter and Scope

1.1. APG requests a derogation from the implementation of the minimum margin available for
cross-zonal trade of 70% transmission capacity as established in Article 16(8) and in
accordance with Article 16(9) of the Regulation 2019/943 for the duration of one year for its
Core bidding zone borders AT/DE, AT/CZ, AT/HU as well as AT/SI.

1.2. This request for derogation is based on 5 different foreseeable grounds for deviating from
the 70% capacity criterion as further described in Article 3 justifying the approval of a
derogation.

Article 2 Definitions and abbreviations

AMR Adjustment for minRAM

CC Capacity Calculation
CCR Capacity Calculation Region

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CEP Clean Energy Package
CGM Common Grid Model
CNE(C) Critical Network Element (with Contingency)
CWE Central Western Europe
D-2 Two-Days Ahead
FB Flow Based
FBCE Flow Based Common Environment
INB Italian North Border
MACZT Margin Available for Cross-Zonal Trade
minRAM minimum Remaining Available Margin
MNCC Margin from Non-Coordinated Capacity Calculation
MCCC Margin from Coordinated Capacity Calculation
MTU Market Time Unit
NP Net Position
NTC Net Transfer Capacity
PFC Power Flow Colouring
PST Phase-Shifting Transformer
RAM Remaining Available Margin
TRM Transmission Reliability Margin
TTC Total Transfer Capacity

Article 3 Foreseeable grounds impacting operational security

Acknowledging that key methodologies from the CACM and SOGL Regulations mentioned in the
Introduction are still not implemented in the CCRs in which APG is actively involved as a member
TSO, APG cannot count on them in relation to the assessment and fulfillment of 70% capacity
criterion, starting as of 1 January 2020. Based on this, the application of the minimum capacity of
70% in accordance with Article 16(8) of the Regulation 2019/943 for borders using a coordinated
net transmission capacity and for borders using a flow-based approach from 01 January 2020 on,
endangers the operational security due to the 5 foreseeable grounds stated in Table 1, which are
further elaborated in this Article. These foreseeable grounds are relevant for all Austrian borders
of the Core CCR (AT/CZ, AT/HU, AT/SI and AT/DE) if not explicitly specified otherwise.

TABLE 1. LIST OF FORESEEABLE GROUNDS THAT ENDANGER THE OPERATIONAL SECURITY

No. Description

3.1 Insufficient concepts and IT-Tools for capacity calculation and validation (in line with the
Regulation 2019/943) in the different capacity calculation areas

3.2 Insufficient redispatch potential to guarantee the 70% capacity criterion

3.3 Absence of consideration of flows of 3rd countries in the capacity calculation

3.4 Current usage of CNEC capacity > 30% by loop flows and PST flows and lack of cross-CCR
coordination

3.5 Uncertainties in the capacity calculation process related to the non-existence of a common
coordinated forecast process in Europe

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As further elaborated in this Article all these arguments related to the request for derogation
pursuant to Art 16(9) of the Regulation 2019/943 are foreseeable, they directly impact APG’s
operational processes and are of major importance for maintaining the operational security.

3.1. Insufficient concepts and IT-Tools for capacity calculation and validation (in line
with the Regulation 2019/943) in the different capacity calculation areas

Referring to Point (4) of the Introduction key methodologies concerning a capacity calculation and
validation broadly coordinated in the Core region for the day ahead and intraday timeframe
according to the CACM Regulation will not be implemented until the January 1st 2020. It was
concluded that APG cannot count on them in relation to the fulfillment of the 70% criterion, starting
as of 1st January 2020.

Capacity Calculation at NTC borders: As the Regulation 2019/943 entered into force on 4 July 2019
and the relevant ACER Recommendation (No 1/2019) was published on 9 August 2019, there is a
too short time period left for TSOs to adapt current processes related to capacity calculation
(evaluation, development, specification, implementation, testing, training) and be ready to fulfil
requirements stemming from Article 16(8), starting from the 1 January 2020. The currently applied
NTC methods (at AT/CZ, AT/HU, AT/SI) have been designed in such a way that they follow the
ENTSO-E methodology which is based on the calculation of TTC (Total Transfer Capacity) and TRM
(Transmission Reliability Margin). The NTC methodology assumes bilateral stepwise
increase/decrease of power generation per country and monitoring of the n-1 security criteria
relevant for a certain border. By that process the total values of cross-zonal capacity are calculated
per border (and not per CNEC). That currently applied method, which is not compliant with the
coordinated NTC approach according to the CACM Regulation, has neither been designed to
calculate the margins available for cross-zonal trade per CNEC nor to evaluate the influence of
commercial trades from the other non-coordinated areas on the elements of the coordinated area
or to distinguish between different flow types.

Capacity Calculation at Flow Based (CWE) border (DE/AT): As the Regulation 2019/943 entered
into force on 4 July 2019, there is a very short time period left for TSOs to adapt current processes
related to flow-based capacity calculation and be ready to fulfil obligations from Article 16(8),
starting from the 1 January 2020. The necessary IT changes include the possibility to set the
minRAM value per CNEC individually (nowadays only a global setting for all CNECs is possible), while
there is also a necessity to have an agreed method (followed by IT development) on how to
calculate MNCC values per CNEC. According to the latest information available, only the option to
set the minRAM values individually for each CNEC in CWE will be ready in time. Regarding the
calculation of MNCC, CWE TSOs have consulted CWE NRAs on open questions for the IT
developments. However, for certain points CWE NRAs haven’t provided a common guidance yet,
e.g. concept for consideration of MNCCs.

Capacity Validation at NTC and Flow Based (CWE) border (DE/AT): The new methods and
processes of capacity calculation in line with the requirements of the Regulation 2019/943 (see
Capacity Calculation paragraphs above and Article 4) and according to ACER’s Recommendation
(No. 01/2019) are expected to lead to significantly more volatile MCCC values, which due to the
basic principles of the methodology according to the Recommendation can go way beyond the
security limits, as first evaluations show. Therefore an additional process step for operational
security validation of the calculated capacities is of paramount importance to ensure secure

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operational conditions. The concepts, methods and IT-tools for this process step are currently not
yet available.

Due to the location in the center of the continent, APG is highly exposed to the effects of diverse
developments on the electricity sector in many European countries. In this context for APG it is
even more critical that the capacity calculation and forecast methods are not yet harmonized and
properly coordinated (see Introduction (4)). Hence, such a validation process is of high complexity
and has to consider all relevant uncertainties that come along with the current status. It needs to
be newly developed and tested thoroughly, to ensure that the capacities calculated under
consideration of minimum targets according to the Regulation 2019/943 can be secured in each
and every MTU with the remedial actions available.
Without a reliable validation process, along with the new respectively enhanced capacity
calculation concepts considering the 70% minimum target, there is no possibility to evaluate if the
available remedial actions and especially the redispatch potential after the closure of day-ahead
energy market are sufficient to solve potential overloads and to ensure physical firmness of the
transmission capacities offered on D-2 level. This could lead to situations, where higher capacities
are given to the market with the goal to fulfil the 70% MACZT criterion, but the redispatch
potentials to ensure these capacities are physically not available. This would impose an
unbearable risk for operational security and endanger security of supply. Currently such a process
is not in place yet. A reliable validation process including the relevant IT tools is foreseen to be
developed and implemented according to the steps provided in Article 4.

Due to the aforementioned reasons APG is not able to calculate from 1 January 2020 the volume
of NTC transmission capacity on its Eastern and South-Eastern borders (AT/CZ, AT/HU, AT/SI) that
would comply with the newly designed 70% criteria on at least one limiting CNEC. Concerning the
CNECs relevant for the CWE region, the minRAM values to be determined in line with ACER
Recommendation (No. 01/2019), that consider exchanges outside of CWE region (MNCC values),
can as well not be calculated by 1 January 2020. Even if the capacity calculation in line with CEP
70% requirement would be possible starting from 1st January 2020, without reliable validation
processes, it wouldn’t be feasible to evaluate if the available remedial actions are sufficient to
solve potential overloads and to ensure physical firmness of the transmission capacities offered
on D-2 level.

Due to those reasons, APG is not able determine with any appropriate accuracy the 70% cross-
zonal capacities to be offered to the market, and in the consecutive step, cannot validate their
feasibility by ensuring the network security.

A raise of cross border capacities currently cannot be assessed by APG at capacity calculation
stage neither regarding the effect on the 70% targets and nor on the impact on operational
conditions. Such an approach would impose an unbearable risk for operational security and
seriously endanger security of supply (see as well 3.3).

3.2. Insufficient redispatch potential to guarantee the 70% capacity criterion

Already today APG regularly applies remedial actions including substantial volumes of redispatching
to ensure firmness of already allocated capacities and maintain operational security. Studies and
analysis performed so far have shown, that the redispatch potential and processes currently
available might not be sufficient to guarantee the 70% capacities, starting from 1 January 2020. In
fact, an increase of cross-zonal capacities could lead to situations, where the current redispatch
potential is not sufficient to ensure a safe grid operation. On top of that, significant uncertainties

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related to the forecasts of cross-zonal exchanges outside of the respective coordination area (see
3.5) will increase the demand for redispatching capacities even much further. Key methodologies
according to the CACM Regulation and SOGL addressing that issue, especially regarding operational
security coordination as well as coordinated redispatching and countertrading will not be
implemented by 1 January 2020 and will therefore not alleviate that situation.

Due to the reasons above a mismatch between the amount of redispatch needed when increasing
capacities towards 70% requirements and the currently available redispatch potential is expected
by APG, especially under consideration of the currently available methods and processes.
Insufficient remedial actions and especially redispatch capacities constitute a high risk for
operational security.

3.3. Absence of consideration of Flows of 3rd Countries in the Capacity Calculation1

According to the guidance given by EC in its letter from 16 July 2019, the consideration of the non-
EU country flows in the capacity calculation and counting these flows towards the 70% target of
MACZT should be possible on the condition that an agreement has been concluded by all TSOs of a
CCR with TSO of the third country, approved by the respective NRAs. This agreement should be fully
in line with EU capacity calculation principles and rules, and should cover at least:

 Consideration of internal third country constraints for intra-EU capacity calculation

 Consideration of EU internal constraints for capacity calculation on the border with third
countries, and
 Cost-sharing of remedial actions

However, the physical flows caused by the 3rd countries are present on the CNECs and cannot be
artificially neglected in the calculation process. It also needs to be pointed out that non-
consideration of third country flows leads to a different treatment of the EU Members States TSOs
with the regard to fulfilment of 70% requirement, with a significant disadvantage for those which
are stronger exposed to flows of 3rd countries.

As the cross-zonal capacities of APG are significantly influenced by the import/export of

Switzerland, a non-consideration of schedules from/to Switzerland during the determination of
MNCCs would lead to a RAM shift towards lower RAMs on the certain APG CNECs and also bring
uncertainties. . With a focus on Switzerland different potential options of the inclusion are currently
being investigated within the Core CCR in close coordination with the European Commission, ACER
and the NRAs of the Swiss neighboring countries. Depending on the resulting solution a contractual
framework is planned to be established. Nevertheless the timeline to fulfil all the preconditions
related to the inclusion of third countries into the determination of MACZT stated above is very
tight. Under consideration of the status and the remaining open issues, it is rather unlikely and not
in the sphere of APG that an appropriate contractual framework can be concluded before 1 January
2020. In order to fulfil the 70% requirement without considering CH, APG would need to artificially
increase available capacity/RAM on some CNECs. Based on analysis performed with historical
data, some CNECs are highly influenced from third country flows. A further artificial increase of
capacity/RAM would increase the risk for operational security risk and endanger the network
security.

1
Argumentation is valid for all APG CNECs / NTC borders, but especially relevant for the consideration of CH
flows in the calculation of DE/AT capacity calculation

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3.4. Usage of CNECs capacity >30% by loop or PST flows originating from the other
coordination areas (or capacity calculation regions) due to the lack of cross-CCR
coordination2

According to the Regulation 2019/943, the total amount of 30 % of capacity on each CNE can be
used for the reliability margins, loop flows and internal flows. Based on the calculations performed
with historical data, the volume of loop flows and PST flows is sometimes substantially higher on
some CNECs. This inevitably leads to the fact that 70% margin available for cross-zonal trade
cannot be fully given to the market without endangering network security, as a large amount of
capacity is blocked by loop flows (incl. PST flows). The reason for this can be found in the not yet
implemented coordinated capacity calculation methods according to the CACM Regulation in the
different CCRs (calculation of loop flows and its limitation is foreseen in the Core CCM), the pending
implementation of proper methods for operational security coordination and the non-existence of
adequate cross-CCR coordination, as for example between Core and Italy North CCR.

3.5. Uncertainties in the capacity calculation process related to the non-existence of a

common coordinated forecast process in Europe

According to the Regulation 2019/943, the reliability margin on a critical network element needs to
be contained within 30% of Fmax under consideration of contingencies together with loop flows
(incl. PST flows) and internal flows. For the determination of the capacities to be offered for the
cross-zonal trade according to ACERs Recommendation (No. 1/2019), netting of flows outside of
the coordination area (MNCCs) is envisaged. These MNCCs are to be calculated based on non-
coordinated and non-harmonized forecasts. As the coordination areas nowadays are relatively
small (especially for NTC methods), and as there is no common, harmonized and reliable net-
position or exchange forecast yet implemented in Europe, the application of such a methodology
will inevitably lead to large uncertainties which cannot be covered by a such low reliability margin.
Neglecting these evident and foreseeable uncertainties can lead to high overloads and potentially
to operational situations where the available remedial action portfolio (incl. redispatch) is
insufficient. This would endanger the operational security severely.

All five foreseeable grounds clearly justify the necessity of the derogation from the implementation
of the minimum margin available for cross-zonal trade of 70% transmission capacity as established
in Article 16(8) and in accordance with Article 16(9) of the Regulation 2019/943 for maintaining
security of supply.

APG made best efforts in the very short timeframe available to analyse the effects of the 70%
requirements on operational security conditions as comprehensively as possible, which resulted in
the conclusions above. Nonetheless the current level of information is still rather limited and
significant uncertainties remain, e.g. on how other member states will implement the Regulation
2019/943 (especially for NTC-Borders), how certain outages and their combination affect the
capabilities, lack of operational experience with new methods and processes, etc. Therefore it is
currently not yet feasible for APG to assess all the potential effects of the 70% requirements on
operational security conditions conclusively. APG will closely monitor the further developments and
will resume investigations when further information/experience is available.

2
Argument is especially valid for the CNECs of CZ/HU/SI coordination area

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Article 4 Steps towards Implementation of the 70% MACZT Criterion

In order to be able to fulfil the requirements of Art 16(8) of the Regulation 2019/943 and to
conclude with a reasonable certainty whether the cross-zonal capacities could meet those
requirements, APG plans to develop the necessary methods and concepts, as well as the IT tools as
an interim step until the relevant key methodologies according to the CACM Regulation and the
SOGL are implemented (see Introduction (4)).

This article lists concrete steps and projects to mitigate the foreseeable grounds for derogation as
presented in Article 3.

4.1 Mitigation of insufficient concepts and IT-Tools for capacity calculation (in line with
Regulation 2019/943) in the different capacity calculation areas

o As the monitoring concept introduced by ACER with its Recommendation No. 01/2019 is
based on CNECs, changes in the current NTC capacity calculation methodology are
necessary towards the introduction of a CNEC based calculation. Until the implementation
of the Core CCM, for three NTC borders (AT/CZ, AT/HU, AT/SI), an enhanced CNEC based
NTC calculation methodology, which considers mutual interdependencies of all three
borders, will be specified and respective IT-tools will be developed in 2020, followed by the
tests and implementation. The calculation tools should enable APG to calculate in a more
coordinated manner across the three borders the highest possible NTCs with respect to the
70% requirements and under consideration of reliably maintaining operational security. In
addition to the NTC values per border, the result of this calculation should be at least one
NTC-limiting CNEC for a certain MTU, including the related 𝑀𝐴𝑍𝐶𝑇 . Before the successful
start of operation, operator training will take place.

o Until the implementation of the Core CCM, for the CWE border (DE/AT), a centralized
calculation of MNCCs and resulting AMRs (Adjustment for minRAM) is foreseen to be
implemented in the CWE IT system during the year 2020. Besides that, APG is currently
working on a local tool for the calculation of MNCCs and resulting AMRs on its CWE CNECs
for the purpose of testing and analysis. With this tool, it will be possible for APG to
determine the AMRs needed to fulfill a certain 𝑀𝐴𝑍𝐶𝑇𝑚𝑖𝑛 criterion and the still valid 20%
Fmax criterion (within CWE) for its CWE CNECs.

o General technical aspects of NTC and FB capacity calculation methodologies, which will be
developed in 2020, are described more into details in the Article 4.1.1.

o In parallel, APG is actively working together with the other Core TSOs to implement the
Core capacity calculation methodology (Core CCM) in line with the Regulation 2019/943.
This methodology is expected to be a major step towards an adequately coordinated
capacity calculation in the highly meshed system of Continental Europe and, according to
the Core CCM, is to be put into operation by December 2020.

4.1.1 General technical aspects of NTC and FB capacity calculation methodologies

In the course of establishing the methodologies and projects that will provide an interim solution
to the issues that the request for derogation addresses, APG will specify and develop methods and
tools for calculation of cross-zonal capacities on CNEC level. Those methodologies will be based on

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the concepts introduced with the ACER Recommendation No. 01/2019, and aim to fulfil the
following equation in the capacity calculation phase:
𝑀𝐶𝐶𝐶 (𝑀𝑇𝑈) + 𝑀𝑁𝐶𝐶 (𝑀𝑇𝑈) ≥ 𝑀𝐴𝑍𝐶𝑇𝑚𝑖𝑛 (𝑀𝑇𝑈)

Where:

𝑀𝐴𝑍𝐶𝑇𝑚𝑖𝑛 is the minimum MACZT target level for a CNEC and MTU (70%
of Fmax pursuant to Article 16(8) of the Regulation 2019/943 or
lower in case of derogation or action plan)
MCCC is the margin from coordinated capacity calculation
M𝑁𝐶𝐶 is the margin from non-coordinated capacity calculation

Determination of margin for forecast error related to the non-coordinated transit flows calculation

o Due to the central location of APG’s transmission system and the rather small coordination
areas, high MNCC values are the consequence and also high uncertainties in the
determination of MNCC for the Austrian CNECs. These uncertainties are expected to
decrease once the Core CCM including the respectively coordinated forecast processes are
implemented, constituting a large coordinated area encompassing as well four of the six
Austrian borders. Due to the high uncertainties and resulting forecast errors of non-
coordinated transits, it is necessary to apply a dedicated margin for MNCC forecasting
errors in order to ensure operational security. This margin, which is to be considered as a
part of the MNCC, shall be included in the capacity calculation methodology. By taking this
into account, MNCC shall be calculated as follows:

𝑀𝑁𝐶𝐶 = 𝑀𝑁𝐶𝐶𝐶𝐺𝑀 + 𝑀𝑁𝐶𝐶𝑚𝑎𝑟𝑔𝑖𝑛

Where:

MNCC is the margin from non-coordinated capacity calculation

𝑀𝑁𝐶𝐶𝐶𝐺𝑀 is the forecasted non-coordinated transit flow induced by cross-zonal exchanges

outside of respective coordination area(s). The flow is calculated using the best
available forecast of the bidding zones net positions.

𝑀𝑁𝐶𝐶𝑚𝑎𝑟𝑔𝑖𝑛 is the margin necessary to cover the uncertainties related to the forecasted
non-coordinated transit flows induced by cross-zonal exchanges outside of the
coordination area(s). The details related to the calculation of 𝑀𝑁𝐶𝐶𝑚𝑎𝑟𝑔𝑖𝑛 shall be
given in the detailed capacity calculation methodology which is planned to be
implemented in the second half of 2020.

Determination of acceptable level of loop flows

a) Article 16(8) of the Regulation 2019/943 stipulates that 30% of Fmax of CNE under
consideration of contingencies (CNEC) is to be used to accommodate loop flows, internal
flows and transmission reliability margin. Due to the reasons stated in Article 3.4, it will be
necessary to establish an approach to calculate an acceptable level of loop flows.

b) Loop flows are to be estimated during the capacity calculation process by using the CGM.
In absence of the coordinated capacity calculation process in the Core CCR, a CGM shall be
prepared by APG based on best available information in the moment of its creation. In order

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 to obtain the level of expected loop flows per CNEC, net positions of the different bidding
zones in the CGM will be shifted to zero-balance:

𝐹0,𝑎𝑙𝑙 = 𝐹𝑟𝑒𝑓 − 𝑃𝑇𝐷𝐹𝑎𝑙𝑙 ̅̅̅̅

𝑁𝑃𝑟𝑒𝑓,𝑎𝑙𝑙

Where:

𝐹0,𝑎𝑙𝑙 is the total flow per CNEC in situation without any commercial exchange between
bidding zones
𝐹𝑟𝑒𝑓 is flow per CNEC in CGM (with commercial exchanges)
𝑃𝑇𝐷𝐹𝑎𝑙𝑙 is power transfer distribution factor matrix which contains all bidding zones and
all CNECs
̅̅̅̅𝑟𝑒𝑓,𝑎𝑙𝑙 is the total net positions per bidding zone included in the CGM
𝑁𝑃

This approach for the determination of the total loop flow, which represents a situation
without any commercial exchange between bidding zones, is in line with the Article 17.3 of
Core CCM.

c) In order to derive the loop flows per CNEC and until a flow decomposition methodology is
approved within Core, the following decomposition methodology will be applied:
a) Cross zonal CNECs: As there are no internal flows over a tie-line, there is no need to
decompose flows any further as 𝐹0,𝑎𝑙𝑙 defines directly loop flows;
b) Internal CNECs: a flow decomposition method is required to distinguish the internal
flows from loop flows. The Power Flow Colouring (PFC) decomposition method3, which
is based on a perfect-mixer principle and is consistent with the European zonal market
model, will be used to allow for a complete partitioning of the power flow on each
CNEC.

d) For a given CNEC, 𝐿𝐹𝑐𝑎𝑙𝑐 [%] is equal to the loop flow computed following paragraph c) of
this Article divided by 𝐹𝑚𝑎𝑥 , which is the maximum admissible power.

e) The values determined according to point d) of this Article shall be compared with the
threshold of acceptable level of the loop flows (𝐿𝐹𝑎𝑐𝑐𝑒𝑝𝑡𝑒𝑑 [%]). This threshold, which
might be different for cross zonal and internal elements, shall be defined in the second half
of 2020. As the loop flows constitute a part of 30% Fmax margin of each CNEC, loop flows
exceeding the 𝐿𝐹𝑎𝑐𝑐𝑒𝑝𝑡𝑒𝑑 might influence the 𝑀𝐴𝑍𝐶𝑇𝑚𝑖𝑛 value per MTU.

4.2 Mitigation of insufficient concepts and IT-Tools for capacity validation (in line with
Regulation 2019/943)

o Until the implementation of Core CCM, it is planned that a new methodology to validate
the outcomes of the capacity calculation tools (Article 4.1) will be specified and respective
IT-tools will be developed, followed by the tests and implementation.

3
Dusan Vlaisavljevic et al, “Power Flow Colouring: A Novel Power Flow Tracing Methodology Tailored for
the European Zonal Electricity Market Design“, Proceedings of IEEE ISGT Conference (Bucharest, October
2019)

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 o In parallel, APG is actively working with the other Core TSOs to implement capacity
validation requirements in line with Core CCM and in line with the Regulation 2019/943.

4.3 Mitigations for increasing redispatch potential to guarantee 70% requirement

o Until the submission and implementation of Core methodologies according to Articles 35

of the CACM Regulation and Article 76 SOGL, APG will further on actively work on gaining
access to additional redispatch potentials available in neighboring and non-neighboring
countries as an interim improvement. Preliminary assessments show that a higher level or
redispatch volumes are required to ensure the cross-zonal capacities calculated in line with
the 70% requirements.

o The implementation of the methodologies according to Articles 35 of the CACM Regulation

and Article 75 and 76 SOGL is a further key factor in approaching the 70% minimum targets
under secure operational conditions. They are aiming at expanding the available remedial
action portfolio and its optimized application. In parallel to the interim improvement, APG
will actively work with the other Core TSOs to submit methodology proposals related to
coordinated redispatch and countertrading methodology in line with Articles 35 of the
CACM Regulation and Article 76 SOGL and in line with Regulation 2019/943 and
subsequently implement those.

4.4 Absence of consideration of flows of 3rd countries in the capacity calculation

o In order to properly consider the flows originating from 3rd countries, APG is actively
involved in the Core CCR investigations and discussions on how to integrate 3rd countries
in the relevant methodologies.
o With a focus on Switzerland these investigations and developments are currently done in
close coordination with the European Commission, ACER and the NRAs of the Swiss
neighboring countries.
o Depending on the resulting solution a contractual framework is planned to be established.

4.5 Mitigation of CNEC capacity usage >30% by loop flows and PST flows and lack of
cross-CCR coordination

o This foreseeable ground for derogation cannot be solved solely by APG. As the network of
APG is located on the edge of two regions, the mutual interaction between the different
CCRs is especially visible on APG’s CNECs and this requires close coordination and clear
rules of network operation especially for the application remedial actions (e.g. control of
PSTs), which are currently not in place but are foreseen with the implementation of Articles
21 and 35 of the CACM Regulation as well as Articles 75 and 76 SOGL

4.6 Uncertainties in the capacity calculation process related to the non-existence of a

common coordinated forecast process for determination of net positions in Europe
o The application of a capacity calculation process in line with 70% requirements on a
relatively small coordination areas leads to large uncertainties which cannot be covered
with the low reliability margins.

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 o An assessment of adequate minimum reliability margins will be performed by APG during
the implementation of new capacity calculation and validation tools (Article 4.1 and Article
4.2).

The aforementioned mitigation measures will require a significant amount of human and financial
resources. Especially those which are envisaged as individual interim solutions until the relevant
key methodologies according to the CACM Regulation and SOGL (see Introduction (4)) are
implemented, are expected to be in operation just for a very short time period. Hence the huge
effort, interfering with sensible operational processes and potentially restricting the availability of
resources for the development of the enduring solutions according the CACM Regulation and SOGL
in Core is indeed questionable in the view of APG. A review of the necessary efforts and costs
against the short-term benefits and in consequence a guidance on that issue and on the expected
way forward from E-Control would be highly appreciated.

Article 5 Duration of the Derogation

APG requests the derogation for one year in accordance with Art. 16.9 of the Regulation 2019/943.
In the course of the beginning of next year and provided that the derogation was granted, APG will
develop and publish the methodologies and projects that will provide an interim solution to the
issues that the request for derogation addresses in line with the steps set forth in Article 4.

This request is applicable for all the APG CNECs used in day ahead calculation in CWE (respecting
the applicable PDTF threshold) and all NTC borders within the Core CCR.

In case that the technical grounds described in Article 3 of this derogation request cannot be fully
tackled (either by APG or jointly within the Core CCR), before the expiry of the derogation period,
APG might have to request a renewal of the derogation. If such a case should occur, APG will provide
a detailed justification for a renewal of the derogation.

Article 6 Proportionality regarding maintaining the operational security

In light of the foreseeable grounds outlined in Article 3, such as missing capacity calculation and
validation tools, lack of consideration of third country flows, high loop flows and uncertainties as
well as an insufficient redispatch potential, it is not possible for APG to fulfill the 70% criterion from
1 January 2020 without endangering operational security.
Concerning the requirements of Art 16(8) of the Regulation 2019/943 and under consideration of
the ACER Recommendation 01/2019, APG therefore plans to develop the necessary methods and
IT tools for calculation and verification of cross-zonal capacities (see Article 4) as an interim step
until the relevant key methodologies according to the CACM Regulation and the SOGL are
implemented.

Though this interim step will not provide for a solution for all foreseeable grounds according to
Article 3, these developments (according to Article 4) are first of all necessary to enable APG to
evaluate the MACZT at the stage of capacity calculation, which is a precondition to draw conclusions
with reasonable certainty whether the cross-zonal capacities meet the requirements of Art 16(8) of

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the Regulation 2019/943 under the respective framework conditions (e.g. MNCC uncertainties,
level of loop and PST flows). On the other hand, reliable validation methods and tools are vital to
ensure operational security while aiming at the transition towards fulfilment of the 70% criterion.

According to the current planning, in the second half of 2020 APG will test the IT-tools to be
developed and will perform studies in order to parameterize them. In the course of this, especially
the following parameters will be evaluated:

 𝑀𝑁𝐶𝐶𝑚𝑎𝑟𝑔𝑖𝑛 ,
 𝐿𝐹𝑎𝑐𝑐𝑒𝑝𝑡𝑒𝑑 ,
 Reliability Margin
The determination of these parameters (including the final concepts of the respective methods)
will be done based on the results of the mentioned studies and analysis, in coordination with the
national regulatory authority E-Control and under consideration of the operational security.

Until the go-live of the respective methods and tools mentioned above (see Article 4), APG has to
continue to apply the current methodologies and practices for capacity calculation, in order to
maintain operational security, while APG shall make its best efforts to offer the following cross-
zonal capacities as average per year:

o For NTC borders (AT/CZ, AT/HU and AT/SI): Per border and direction the values that are at
least on the same level (on average per border and per direction) as in the last three years.

o For the FB border (AT/DE): 20% of Fmax per CNEC for cross-zonal trades within the CWE
region and the currently applied process of the long-term capacity inclusion.
With the go-live of the new capacity calculation methodologies and respective IT tools, APG will
report the achieved MACZT to E-Control. With the go-live of the validation tools APG will assess in
coordination with E-Control the possibilities to increase cross-zonal capacities considering the 70%
criterion, while ensuring operational security.

The scope of the derogation therefore does not go beyond what is necessary to maintain
operational security, as set out in Article 3 and does not relate to curtailment of capacities already
allocated (Article 8).

Article 7 Non-Discrimination

The proposed derogation aims at the transition from the status quo to the 70% criterion in a non-
discriminatory manner. Any currently applicable methodologies with respect to calculating the NTC
values or FB capacities or any future methodologies which still need to be developed do and will
not contain any measures resulting in a discrimination between internal and cross-zonal exchanges.

The new methodological approaches and related IT tools to be developed during the derogation
period as described in Article 6, aim at an increased transparency that undue discrimination
between internal and cross-zonal exchanges is avoided as the sum of reliability margin, loop flows
below an acceptable level (defined by threshold 𝐿𝐹𝑎𝑐𝑐𝑒𝑝𝑡𝑒𝑑 ) and internal flows on each CNEC is
lower than 30% for as long as operational security can be guaranteed. This ensures that, even in
presence of loop flows above an acceptable threshold, the internal flows accounted for in the
capacity calculation are reduced as long as operational security can be guaranteed.

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Article 8 No curtailment procedures of capacities already allocated
pursuant to Art 16 Abs 2

The proposed derogation shall apply solely to the determination of capacities on all Core CCR
borders of APG, which will be made available for cross-zonal exchanges. The derogation does not
provide any grounds for the curtailing of any already allocated capacities. Curtailments of already
allocated capacities remain subject to respective Network Codes/Guidelines.

Article 9 Request

For all the above mentioned reasons, and as previously mentioned in Article 1, APG, in accordance
with Article 16 (9) of Regulation 2019/943 seeks to be granted a request for derogation from the
obligations under Article 16 (8) of Regulation (EC) No 2019/943 with regard to the bidding zone
borders AT/DE, AT/CZ, AT/HU and AT/SI for the a period of one year.

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