Problems identified by NRAs that may lead to new infrastructure needs 25/10/2016 NSI East Regional Group Meeting

Problems and aspects - electricity Problem categories Aspects to be assessed when deciding a need Price spreads For the past and the present: - Actual price spreads (both directions, representative of seasonal congestions) For the assessment of future time horizons: - The curves “SEW increase over cross-border capacity increase” - In case such a curve is not available, expected “marginal cost difference (€/MWh), accounting for both directions and taking into account the size of the bidding zones and the current market conditions. RES integration - Curtailments (with effect not accounted for in the curves above)> x GWh (taking into account the generation mix across boundaries) Security of supply - System adequacy - System stability (including local network problems)

Overview of NRAs input Views from NRAs were collected via an ACER questionnaire between 26 Sep and 18 Oct. For the NSI East region the following NRAs provided input: ECA (AT), ERO (CZ), AEEGSI (IT), Aze (SI), ERO (PL), MEKH (HU) Disclaimer: not all NRAs provided feedback for the exercise, therefore the list of problems presented herein is not complete. The absence of a report by an NRA may not reflect an absence of a problem in the specific region.

Specific problems identified 1. Price spreads (a) Problems Supporting facts HU: Price spreads on the HU-SK and HU-RO border Actual price spreads: In most cases (70%), day-ahead electricity hourly prices are higher (or equivalent) in Hungary both in the HU-RO and the HU-SK relation. IT: Historically, a significant price spread occurs at the Northern Italian border (AT-IT 2014: 18,7 Eur/MWh. 2015: 20,7 Eur/MWh). Historic figures, and for the future, the TYNDP 2016 identifies the Northern Italian border as one of the main boundaries. The target capacity estimations range between 10 - 13.5 GW for each 2030 vision. A reduction of the cost spread is expected in all visions, and particularly in vision 3 and 4. A more detailed analysis of the target capacity is necessary.

Specific problems identified 1. Price spreads (b) Problems Supporting facts SI: The Slovenian transmission grid is subject to very high transits of electricity (>60% of domestic peak consumption). Although NTC at the Slovenian borders is much higher than 10% of installed production capacity, direct access to all electricity markets where permanent price spread exist is not guaranteed with the existing infrastructure. PL: Loop flows minimise the possibility of trading the energy on PL<=>DE+SK+CZ profile, in such a way that the GTCs on the borders are not available.

Specific problems identified 2. RES integration (a) Problems Supporting facts AT: The fast increase of renewable (mainly PV and wind) generation capacity combined with a slower network development lead to bottlenecks, especially related to N-S flows, which influence might in turn influence SoS and market. See e.g. technical report issued by ENTSO-E in the frame of the bidding zone review. HU: interconnector capacities are decreased by loop-flows Loss of SW indicated in the latest Market Monitoring Report. See also the technical report issued by ENTSO-E in the frame of the bidding zone review. IT: Congestion at the network boundary Center South Italy - Center North Italy (about 2 Euro/MWh price spread in 2015) related to RES overgeneration in Southern Italy and consequent RES spillage (about 50 GWh/year in the period 2013-2015) Historical figures. For the future, both the EU TYNDP 2016 and the Italian plan 2016 indicate an increase of congestion from Center-South to Center-North, with an expected frequency around 25% of time, i.e. about 2200 hours/year (2020 and 2025). "Southern" RES will not reach Northern Italy and neighbouring markets. However, the size of cross-border impact is still to be assessed.

Specific problems identified 2. RES integration (b) Problems Supporting facts DE: RES integration within DE as well as the integration of RES in Scandinavian countries leads to high N-S flows. Within DE the internal HVDC links are used to transport this energy.

Specific problems identified 3. Security of Supply (a) Problems Supporting facts CZ: Loop flows originating from German-Austrian trading zone burden the Czech grid leading to a need for construction of phase-shifters and strengthening of internal lines. It’s important to note that non-infrastructure related solutions should be viewed as complement rather than substitution of infrastructure. Difference between scheduled and real cross-border power flows on individual interconnectors. HU: a. Local potential problems e.g. at Northern Hungary; b. import dependency, i.e. lack of power generators and lack of prospects of generators to be built in the future in North-East Hungary. a. relation (non-compliance or the danger thereof) to provisions in national grid codes or the ENTSO-E Operational Handbook b. import-export balance IT: The Italian Development Plan 2016 assesses system inertia and highlights local problems in specific areas of the Italian network. There is limited availability of resources for voltage regulation and short-circuit power in some areas of Italy, especially in Sardinia. The cross border impact of SoS problems is not defined at this stage, thus we deem not possible to assess it. We regret that the draft TYNDP 2016 does not provide any quantification of the SoS problems. In 2015, significant frequency (i.e. > 30% of time) of undervoltage (i.e. below 390 kV) was recorded in Campania (north of Naples) and in Southern Sardinia.

Specific problems identified 3. Security of Supply (b) Problems Supporting facts AT: The aging networks need refurbishment and upgrading. To maintain SoS during planned outages of key lines new lines including interconnections must increase. SI: The Slovenian transmission grid is subject to very high transits of electricity, which may cause operational security issues. PL: Loop flows on the DE+SK+CZ profile (caused by trade in the Germany – Austria bidding zone) cause the necessity of redispatch in Polish system and limit significantly possibility to import energy.

NSI East – map of reported problems PL DE CZ SK AT HU SI RO IT HR BG EL CY