Cross-border interconnection capacity · Glossary

Cross-border interconnection capacity is the electrical transmission capacity that can be used for cross-border electricity flows between two market areas, price zones or national transmission grids. In EU law, the equivalent term is "cross-zonal capacity". It refers to the ability of the interconnected system to transmit energy between bidding zones. It is expressed as power, usually in megawatts. A cross-border interconnection capacity of 1,000 megawatts means that, at a given point in time, a corresponding amount of power can be transmitted between two areas or made available to the market for trades.

The term has a technical side and a market side. Technically, it concerns lines, substations, phase-shifting transformers, direct-current links, protection systems and the stability of the interconnected grid. In market terms, it concerns how much transmission capacity is released for electricity trading between price zones. The distinction matters because the physically available line capacity does not automatically equal the tradable capacity.

An interconnector or tie line is the specific line between two grids. Cross-border interconnection capacity, by contrast, is the usable transmission capability at a border or between two market areas. It can result from several lines and depends on the state of the entire grid. It is therefore not simply the sum of the line capacities. Even a line with a high rated capacity may be usable for trading only to a limited extent in certain hours if congestion threatens elsewhere in the grid.

Technical basis and unit of measurement

Cross-border interconnection capacity is electrical power and not a quantity of energy. It therefore does not describe kilowatt-hours, but the possible transmission rate at a given moment or over a given period. If a link is used at 1,000 megawatts for one hour, this corresponds to a transmitted energy of 1,000 megawatt-hours. The capacity itself, however, remains a power quantity. In day-ahead and intraday processes it is determined separately for individual market time units.

The technical upper limit results from several factors: the thermal limits of the lines, voltage stability, frequency control, short-circuit strength and the safety rules of grid operation. Transmission system operators must operate the grid in such a way that even the outage of an important piece of equipment remains manageable. Under the N-1 criterion, the grid must not be uncontrollably overloaded if a line, a transformer or another key piece of equipment fails. For this reason, the entire calculated line capacity is not released for trading. EU law, too, refers to the capacity that respects operational security limits and takes contingencies into account.

In meshed alternating-current grids, electricity does not flow along the trading path agreed by contract. It distributes itself across the entire grid according to the impedances of the lines. A trade from country A to country B can therefore trigger physical flows via country C. Such loop flows or parallel flows load lines that do not belong to the traded border at all. For cross-border interconnection capacity, therefore, not only the link between two countries matters, but the state of a larger grid area.

Direct-current links can be controlled better. A high-voltage direct-current link can transmit a defined power flow between two points. Here too, however, the usable capacity depends on the grid at both ends. If the grid at the injection or withdrawal point were overloaded, even a high-capacity direct-current line could not be used to its full extent.

Distinction from line capacity, trading capacity and import capability

Cross-border interconnection capacity is often equated with the rated capacity of individual lines. This creates false expectations. The rated capacity indicates what power a piece of equipment can carry under defined conditions. The tradable cross-border interconnection capacity indicates which part of that is usable for the market under the grid conditions expected in each case.

Import and export capability is also not a fixed property of a country. In one hour a country may be able to import a lot. In another hour, internal grid congestion, regional load distribution or the generation situation may limit imports. In addition, exchange depends on the neighbouring countries. Imports are only possible if generation or storage discharge is available there, prices point in the appropriate direction and grid capacity is sufficient.

Cross-border interconnection capacity must be distinguished from residual load. This is the load that remains to be met by dispatchable generation, storage, flexible demand or imports after deducting weather-dependent generation from wind and solar. Cross-border interconnection capacity is one way of closing this gap through spatial balancing. However, it replaces neither firm capacity nor sufficient flexibility in the overall system.

Role in electricity trading and market coupling

In the European electricity market, cross-border interconnection capacities are used to trade electricity between price zones. In the day-ahead market this takes place through Europe-wide market coupling (Single Day-Ahead Coupling, SDAC). Bids, demand and available transmission capacity are brought together in a joint calculation. The capacity is thus allocated implicitly together with the energy. If electricity is cheaper in one zone than in another, trade flows there as long as capacity is free. The capacity thereby aligns prices.

If the capacity is sufficient, the prices of the coupled areas converge. If the border is fully utilised, a price difference arises. It shows that the link has become the limiting factor. In such hours, cross-border interconnection capacity has an economic value. It accrues to the transmission system operators as congestion income. Under Article 19 of the EU Electricity Regulation (EU) 2019/943, this income is to be used primarily for two purposes. First, it is to ensure that allocated capacity is actually available. Second, it is to maintain or increase cross-zonal capacity, above all through grid investments in interconnectors. Only after that may it be taken into account, under regulatory supervision, to reduce network charges in their calculation. The grid operators must report to the regulatory authority on its use. In Germany, the Bundesnetzagentur publishes an annual report on this.

Capacity calculation in Europe follows different methods. In the simpler method, a coordinated net transfer capacity (NTC) is determined for each border, i.e. a bilateral megawatt figure. In heavily meshed regions, the calculation is flow-based. In this approach, the grid operators assess trades according to how they affect critical network elements across the entire calculation area. In the Core capacity calculation region, this method has applied to day-ahead trading since 8 June 2022 (first delivery day 9 June 2022). The region includes Germany, France, the Benelux countries, Austria, Poland and further Central and Eastern European countries, among others. The method represents the physics more accurately, but no longer yields a simple megawatt figure per border, but a multidimensional range of possible trading positions.

Legal framework: the 70 percent requirement in the EU

How much capacity is made available for trading is not determined by the individual transmission system operators alone. They calculate capacities in a coordinated manner. Regulatory authorities oversee the procedures, and EU law sets minimum standards. Central is Article 16(8) of Regulation (EU) 2019/943. At borders using the NTC method, at least 70 percent of the transmission capacity that respects the operational security limits after deduction of contingencies must be made available. With flow-based calculation, at least 70 percent of the capacity so defined must be available on the internal and cross-zonal critical network elements for flows resulting from cross-zonal trade. Internal congestion should therefore in principle not be resolved by curtailing capacity at the border.

Member States with structural congestion could draw up an action plan under Article 15. In it, trading capacity is increased annually along a linear trajectory. The minimum capacity was to be reached by 31 December 2025 at the latest. In addition, the Regulation allows temporary derogations by the regulatory authorities where this is necessary for operational security. Whether the requirement is met at a particular border in a particular hour can only be assessed using the monitoring data of the grid operators and regulators. The framework shows the constant balancing between European market integration, national grid operation and internal congestion.

Why scarce cross-border interconnection capacity affects prices and supply

Cross-border interconnection capacity enables spatial balancing. Via interconnection points, wind power surpluses in one region, hydropower in another, thermal power plants, storage and flexible loads can be linked with one another. The better the links can be used, the less often each region has to meet its demand entirely by itself in every hour.

This does not automatically reduce all costs. Cross-border interconnection capacity can make more efficient use of generation, dampen price spikes and reduce the need for local reserves. But it can also shift congestion into the interior of the grid, make more redispatch necessary or aggravate political conflicts over the delineation of price zones. An example: cheap generation in the north of a price zone is exported across a border while a line bottleneck exists within the same zone. The export may then be economic in the market and still force interventions in the grid. Grid operators must curtail power plants before the bottleneck and ramp up plants behind it. These interventions cost money. They show that price zone delineation, grid expansion and trading rules must be considered together.

For security of supply, cross-border interconnection capacity is an important building block, but not a guarantee. In stress situations, neighbouring countries may simultaneously experience high load, little wind, low solar output or power plant outages. The formal import capacity then says little about whether electricity is actually available. Security of supply therefore requires, in addition to interconnectors, firm generation, storage, flexibility, demand management and robust operating reserves.

Common misunderstandings

A widespread misunderstanding is that exports prove surplus and imports prove shortage. In the coupled market, trade mainly follows price differences and available capacities. A country may import because electricity is currently cheaper in the neighbouring country, even though its own power plants would be available. It may also export even though there is a grid bottleneck in another region of the same country. The direction of trade and the supply situation must therefore not be equated.

Equally wrong is the assumption that additional cross-border interconnection capacity automatically solves national grid problems. Interconnectors connect market areas. They do not, however, replace the expansion or better use of the internal grids. If electricity within a price zone cannot be transported to where it is needed, an additional link at the border helps only to a limited extent. It can even create new load flow patterns that make further interventions necessary.

Another misunderstanding concerns the origin of the electricity. In cross-border trade, no specific electron is delivered from the power plant abroad to the consumer at home. The market allocates injection, withdrawal and transmission rights on an accounting basis. Physically, flows in the entire synchronously interconnected grid settle according to frequency, voltage and impedances. Anyone wishing to assess imports, guarantees of origin or grid congestion must therefore distinguish commercial exchange from physical flow.

Context in the transformation of the electricity system

As wind and solar generation grows, the value of spatial balancing increases. Weather patterns and load profiles differ regionally. Cross-border interconnection capacity can help make better use of renewable generation and reduce curtailment. At the same time, it becomes more important when electricity is available. A high annual volume from renewable sources does not replace transmission capacity in exactly the hour in which a bottleneck occurs.

Electrification further changes these relationships. Heat pumps, electromobility and electrified industrial processes increase electricity demand and change load profiles. If this demand is operated flexibly, it can ease bottlenecks and exploit favourable import or export situations. If it occurs inflexibly, the demands on grids, generation and cross-border capacities rise. Cross-border interconnection capacity is thus closely linked to electricity market design, grid planning, storage management and the question of how price zones reflect spatial scarcity.

The term shows that European electricity trading does not end at political borders, but is bound by physical limits. Cross-border interconnection capacity describes the usable transition between market areas under specific grid conditions. Anyone who reads it as a fixed sum of lines, as an import guarantee or as proof of national self-sufficiency overlooks the rules and operating limits that make cross-border trade possible in the first place.

Sources

Regulation (EU) 2019/943 on the internal market for electricity (recast) — Europäische Union (EUR-Lex); 2019-06-05. Art. 2 Nr. 70; Art. 15 Abs. 2; Art. 16 Abs. 8; Erwägungsgrund 28
Verordnung (EU) 2019/943 über den Elektrizitätsbinnenmarkt (Neufassung) — Europäische Union (EUR-Lex); 2019-06-05. Art. 19 (Engpasserlöse)
Day-ahead capacity calculation – Core CCR — ENTSO-E; unbekannt. Abschnitte Introduction und Flow-based capacity calculation
Erlöse aus grenzüberschreitendem Engpassmanagement (Engpasserlösbericht 2023) — Bundesnetzagentur; unbekannt (Berichtsjahr 2023). Einleitung; Abschnitte zu Art. 19 Abs. 2, 3 und 5 VO (EU) 2019/943

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Edited by eCMS on 12.11.2026 05:05