From basic economic principles, it is known that trading between different market parties increases the social welfare of the whole area. However, in certain cases the volume of goods that can be traded is limited to one that does not spawn the maximum achievable social welfare of that region, due to external constraints.

One of the goals for the European interconnected grid is to approach the largest amount of international trading in order to increase social welfare, by providing as much international transport capacity as possible to market parties. This complicated exercise has to be solved while taking a higher degree of unpredictable renewable energy sources into account, and while ensuring a safe grid operation even in case of severe contingencies.

It can be expected that when limits are approached, the importance of a proper calculation becomes indispensable, since physical limits shall not be crossed. For this, a new calculation method has been developed in the Central-West European (CWE) countries, called Flow Based Capacity Calculation. In this methodology, real electricity flows are decoupled from economical ones, and limits are calculated per branch rather than per border. This allows transmission system operators to work closer to the limits, and ensure a safe network operation with lower margins. To date, these international capacity calculations are the most accurate, secure and operationally feasible that exist.

One of our consultants is working on the support of this innovative market coupling mechanism in the CWE countries. This new and complex project aims at including still more countries, which is why our consultant has worked on establishing an e-learning course to explain how this works. Ultimately, the goal is to interconnect all European grids by means of this capacity calculation mechanism. Economically speaking this would boil down to a situation where a Spanish electricity reseller can buy electricity from a Norwegian hydropower plant, while the system operators everywhere in Europe ensure the fact that this increase in consumption on the Spanish territory and increase in production on the Norwegian side will not trigger any unsafe situations.

Our consultant’s most important tasks, however, are to support daily operations on the grid, to provide insights by means of analyses, to scrutinize the impact of adjusted parameters and regulations in terms of grid security and related costs, and to report on achieved results.  All this aims at making the grid more efficient and secure, with an increased social welfare and optimized use of renewable power plants, while not compromising grid reliability or security.