Eastern Neighbors Bemoan German-Austrian Power Market Break

Germany and Austria are frustrating their eastern neighbors by dividing Europe’s biggest electricity market in a way that fails to prevent unplanned power surges through Poland and the Czech Republic.

The 15-year-old German-Austrian market has long vexed the Czechs and the Poles because wind power from northern Germany on the way south often gets rerouted through their territories, overwhelming their grids and risking blackouts. While they welcome the idea of the split, they complain they weren’t consulted on the decision.

The so-called loop flows occur when Germany and Austria book more trades than the cables on their border are capable of handling. The countries agreed last month on a minimum flow of 4.9 gigawatts for long-term trading, or the capacity of about five nuclear reactors, from October next year. The Czechs and Poles argue that level is too close to pre-split levels.

“It’s a completely artificial number that doesn’t correspond with the actual physical flows occurring between the two countries,’’ Zbynek Boldis, a board member of Czech grid operator CEPS AS, said in an interview in Prague. “It’s hypocritical. It won’t have the desired effect of reducing loop flows at all.”
The actual limit at the border is about 4 gigawatts, according to Bloomberg New Energy Finance estimates. Flows above that level caused about 1.2 gigawatts of electricity to spill into other networks in 2011-2012, according to Polish grid operator PSE. 

The Czech and the Polish regulators will submit their concerns to Europe’s Agency for the Cooperation of Energy Regulators, or ACER.

Practicable Plan

Austria will provide and pay for as much as 1.5 gigawatts of power plants to stay on standby to produce the electricity that can’t physically cross the border, easing the strain on its neighbors.

“We regard the agreed minimum capacity of 4.9 gigawatts as a practicable way to enable a balance between the technical grid situation and the goal of the internal energy market,” Wolfgang Urbantschitsch, executive director at E-Control, Austria’s energy regulator, said by email.

The border limit should be possible without electricity looping through neighboring grids, German network regulator Bundesnetzagentur said. The agreement is only an “important” interim step before border flows are coordinated between western and central European countries, it said.

ACER last year called for a trading limit at the German-Austrian border as part of an EU-wide coordination of power flows that would include central and eastern European grids. E-Control filed a lawsuit at the EU’s General Court on May 29 against the decision. ACER wouldn’t immediately comment on the lawsuit when contacted by phone.

Agreements between member states can only provide “clarity for the interim period” until a European legal framework is finalized, Nicole Bockstaller, a spokeswoman at the European Commission, said by email. Until then, there is no clear rule on who makes the final, binding decision on the border flows, she said.

Under their agreement, Germany and Austria will also offer capacity for short-term trading based on an algorithm that calculates the allocation of electricity flows across Belgium, France, the Netherlands and Germany. Grid companies from the Czech Republic to Hungary complained in a May 24 statement that the plan doesn’t consider their networks.

“There is a lack of coordination in this process,’’ said Justyna Pawlinska, a spokeswoman for Poland’s energy regulator. “There is no information how it was calculated and whether the critical branches of neighboring systems were taken into consideration.’’

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