LitPol Link MoU Brings Polish – Lithuanian Energy Trading a Step CloserApril 27, 2015
20 April 2015 a Memorandum of Understanding (MoU) has been signed to agree on common power trading principles for the LitPol Link, the new Lithuania-Poland power interconnection planned to open in the end of 2015.
The MoU, signed by the Transmission System Operators in Poland, PSE S.A, and Lithuania, Litgrid AB, as well as the Power Exchanges operating in Poland - TGE, and Lithuania - Nord Pool Spot, sees the parties agree on the implementation of common trading principles on the LitPol Link, which brings Polish – Lithuanian power trading a step closer. It is important for all parties that the LitPol Link is available in the open market, so that all market participants wishing to buy or sell electricity within Poland and Lithuania can do so in a transparent manner.
When the LitPol Link opens, day-ahead capacity will be allocated under market coupling arrangements, as a part of the European Market Coupling (Multi Regional Coupling – MRC). The rated power of the LitPol Link is 500MW, and is the first interconnector between Poland and Lithuania.
PSE, Litgrid, TGE and Nord Pool Spot are jointly preparing all the detailed market operations arrangements needed for planned go-live in the fourth quarter of 2015.
In parallel to market operations arrangements, PSE and Litgrid have agreed on the main principles of bilateral cooperation between system operators, paving the way for concluding the System Operation Agreement regulating the technical operation of the LitPol Link.
Market Coupling refers to a market mechanism that, in determining the value of the electricity in the different areas of the European market involved, simultaneously allocates the available power transmission capacity between such areas via implicit auction, maximizing overall social welfare. Market Coupling allows for avoiding the separation between the power transmission capacity product and the traded electrical energy, reducing thus the risk associated with two separate business processes related to capacity and energy. The situation in which power transmission capacity is unused despite the existence of a price differential between the two markets shall be no longer observed.
Multi-Regional Coupling (MRC) is a pan-European project aiming at integrating electricity spot markets in Europe. MRC involves implementation of market coupling for day-ahead cross-border markets, in cooperation between Power Exchanges and Transmission System Operators. Coupling of wholesale market across Europe based on market coupling which will increase the efficiency of allocation of interconnection capacity of the countries involved and the overall social welfare. Currently, MRC covers allocation of day-ahead cross-border capacity of all interconnectors within and between the following countries: Austria, Belgium, Denmark, Estonia, Finland, France, Germany, Great Britain, Italy, Latvia, Lithuania, Luxembourg, the Netherlands, Norway, Poland (via the SwePol Link), Portugal, Slovenia, Spain and Sweden.