Congestion displacement in European electricity transmission systems – finally getting a grip on it? Revised safeguards in the Clean Energy Package and the European network codes

Abstract

During the last three decades, the European Union has worked on creating a pan-European internal market for electricity, aiming to establish an ‘Energy Union’ of unrestricted cross-border electricity trade. Under the ‘Clean Energy for all Europeans Package’ and the European network codes, the legal framework for the electricity sector has recently received a comprehensive update. However, electricity trade between the Member States is still severely limited due to insufficient transmission capacity on cross-border interconnectors. One reason is that network operators restrict cross-zonal capacity in order to relieve congestion inside the domestic grids, effectively pushing congestion to the border. This practice entails partial market foreclosure and is of vast practical significance, but has only received limited attention from energy law scholars. Since the borders between the Member States remain obstacles to the free trade of electricity despite political endeavours and extensive regulation of the electricity sector, one might ask whether the legal framework on congestion management in electricity networks provides sufficient incentives to relieve congestion where it occurs, that is, within the congested network. To answer this question, this study will scrutinise the pertinent provisions of EU energy law – with a particular focus on recent revisions under the Clean Energy Package and the European network codes – against the background of several case studies. The objective is to identify relevant legal, economic and political contributing factors and assess whether EU energy law addresses them adequately.