The European interconnected power system is a very complex construct.
Thousands of synchronously interconnected generation units, and advanced control systems guarding its secure operation, ensure that the demand is continuously satisfied, in all instances of time, providing reliable energy supply for all Europeans. In power system operation it is the laws of physics that prevail over administrative and legal boundaries.
Zonal electricity market design, currently applied in Europe, is one of these legal-administrative attempts at framing complex phenomena into simplified rules. However, simplifications are often too far going, so that when “simple” zonal market model is confronted with complex physical interactions in interconnected meshed power system, challenges arise.
The increasing gap between markets and system operations and rising levels of loopflows and unscheduled power flows are among the most important ones. However, what are these “loopflows” and “unscheduled flows”?
Where exactly is the problem?
European market is organized in bidding zones, with borders mostly aligned with political ones. By its inherent feature, transactions concluded on EU electricity market can be divided into two categories: transactions within a bidding zone and transactions between bidding zones. First kind of transactions is carried out under the ‘copper plate model’ and is thus not restricted by any system constraints, nor has it to compete for transmission capacity. The second category of transactions, the cross-border one, requires access to cross-border capacity and is by definition limited to the capability of the transmission system to support cross-border transactions. Inherently, zonal market model foresees thus different treatment of internal and cross-zonal transactions. However, notwithstanding the administrative and legal boundaries, the electrical energy flows according to the laws of physics. As a consequence, transactions within and between bidding zones utilize the whole set of transmission lines, including lines located in countries not directly participating in these transactions.
Categories of power flows
Commercial energy transactions may be concluded between market participants within the country (bidding zone) or/and cross-border. In order to facilitate good understanding of the phenomena, it is worthwhile to consider the implications of commercial transactions on different types of physical flows  (see figure 1.):
- Internal flows – physical power flows observed on network elements within a bidding zone caused by commercial energy transactions within this zone. In this case, the source, sink, and the concerned line are located in the same bidding zone;
- Import/export flows – physical power flows in particular bidding zone caused by scheduled commercial energy export/import transaction from this bidding zone to neighbouring bidding zones;
- Loopflows – physical power flows in one bidding zone caused by internal commercial energy transactions within another bidding zone;
- Transit flows – physical power flows in one bidding zone caused by commercial energy exports and imports transactions between other bidding zones.
What is the typical system reality?
The above Figure 1 gives overview of all above physical flow categories. It is important to highlight that in reality, all kinds of these physical power flows occur at the same time, i.e. internal energy transactions are causing internal physical flows inside concerned bidding zone and also loopflows in all other bidding zones, while export and import energy transactions cause import and export power flows on directly affected borders and transit flows in other bidding zones. In fact, every commercial energy transaction will be physically realized by power flows scattered over the interconnected power system according to Kirchhoff laws.
Transit flows can be scheduled or unscheduled, the difference being the level of coordination during capacity calculation and allocation. This coordination takes form of regional processes, such as flow-based, allowing for all transits to be coordinated and scheduled. In absence of such coordination, transits are unscheduled (i.e. approved by some TSOs without acceptance of other TSOs) and negatively influence the affected TSOs. Loopflows on the other hand, are an externality of the zonal model. Simply, zonal capacity allocation is not able to capture loopflows since its level is not in any reliable way correlated with exports and imports. Since loopflows cannot be “scheduled” during allocation, they are considered in the capacity calculation “base case” necessary to calculate cross-border capacities. This is necessary because loopflows will appear in real time irrespectively of the level of cross-border commercial exchanges.
How to cope with loopflows and unscheduled power flows?
Decomposition of power flows into flow categories is not trivial, but it can be done with reasonable accuracy. Having the information about different types of flows, one is able to address the underlying issues more efficiently:
- Loopflows – as externality of zonal market and inevitable consequence of such market design choice, loopflows cannot be completely eliminated. However, the better the zones (smaller, more internally interconnected), the lower the loopflows. Hence, in order to address the issue of loopflows, one needs to either reinforce internal grid within the zones to minimise the gap between the assumed copperplate and reality, or split the zones into smaller ones to better reflect power system capability.
- Internal flows – internal flows result from internal energy transactions. Since grid users of particular country paid via transmission tariffs for the internal grid development, they have a legitimate right to use this grid. Hence, these flows should be considered as legitimate under zonal design (in contrast to loopflows which is unwanted externality).
- Import/export flows – these are physical effect of direct imports and exports. Since they are scheduled between directly affected TSOs (countries), they could be considered as coordinated and legitimate under zonal markets. With more regional coordination, these types of flows will be handled even better.
- Unscheduled transit flows – these result from lack of or insufficient coordination, so improvement in capacity calculation and allocation can address these. Implementation of Flow-Based covering as large geographical area as possible is the right approach to address these;
Improving European cross-border market will require progresses in all above domains: grid investments, better zones and better coordination of cross-border trade.
 Definitions are based on ACER-ENTSO-E, Joint Task Force Cross Border Redispatch Flow Definitions, 2011.