The Spanish electricity system will receive 38 million euros as a result of the interconnection capacity auctions between Spain and France and Spain and Portugal for 2019. This amount is earmarked for reducing the regulated costs of the system. The interconnection capacity auctions with our neighbouring countries are a tool by which market agents (generators and retailers) bid to acquire the transmission rights to transfer energy from one country to another in order to guarantee a stable price of such energy exchange. This process helps set the marginal price for each interconnection and for each direction.
In the Spain-France direction, 600 megawatts (MW) were offered and allocated for each hour of the year, establishing a final price of 4.36 euros/MW per hour. In the France-Spain, 800 MW were offered and allocated, with a final price of 7.51 euros/MW per hour. Twelve of the thirty participating agents obtained capacity in both directions.
In this way, Red Eléctrica de España (REE) and Réseau de Transport d’Électricité (RTE), operators of the Spanish and French systems, respectively, have allocated physical transmission rights (exchange capacity) whereby the bidders allocated this type of capacity and who have paid in full the auction price, have the option of nominating long-term physical energy exchange schedules through the interconnection, or receive the positive price in the Day-ahead Market spread between the Spain and France zones in the direction of the allocated capacity.
Regarding the interconnection with Portugal, Red Eléctrica de España and its Portuguese counterpart, Redes Energéticas Nacionais (REN), have allocated financial transmission rights (product based on exchange capacity that is protected from the fluctuation of the future value of said capacity) whereby the bidders allocated this type of capacity and who have paid in full the auction price, are entitled to receive the positive price in the Day-ahead Market spread between the Spain and Portugal zones in the direction of the allocated capacity.
These annual exchange capacity allocations between Spain and France generated congestion rents (revenues) totalling 75.5 million euros, half of which correspond to the Spanish electricity system. Similarly, the congestion rents generated by the electricity interconnection between Spain and Portugal reached a value of 500,000 euros, half of which correspond to the Spanish system.
In 2018, the hourly exchange capacity of electricity between Spain and France has reached values of up to 3,600 MW and 3,500 MW, in the direction from Spain to France and from France to Spain, respectively, under favourable operating conditions. For its part, in 2018 the hourly exchange capacity of electricity between Spain and Portugal reached values of up to 4,000 MW and 3,800 MW, in the direction from Portugal to Spain and from Spain to Portugal, respectively, under favourable operating conditions.
These annual auctions were held on 10 and 11 of December through the company JAO (Joint Allocation Office), recognised as Europe’s Single Allocation Platform (SAP); noteworthy is that for the first time these auctions included the long-term products for the Portugal-Spain interconnection. In addition to these annual auctions, JAO will also hold monthly auctions in 2019 for the interconnection with France and quarterly and monthly auctions for the interconnection with Portugal.