Since 1 January 2017, the level of loop flows in the day-ahead market coupling through the Belgian zone have been published on a daily basis on the Elia website24. The calculation methodology adopted by Elia is based on data from the FBMC process. The loop flows in the day-ahead market coupling are calculated based on the D2CF files of the base case. The calculation method is published on the Elia website.
Loop flows correspond to physical flows observed on a network element resulting from commercial exchanges inside another bidding zone. They correspond to externalities for economists.
As discussed before, all commercial exchanges give rise to physical flows. Not all of these are considered to be “externalities”. Physical flows arising from commercial exchanges between bidding zones (long term, day-ahead, intraday) are not. They are considered as competitive flows since the commercial exchanges go in competition for the use of the network transmission capacity. Expected physical flows arising from commercial exchanges inside another zone, by contrast, take priority over these flows resulting from the day-ahead market coupling. This priority access is not only market distorting, it also creates inefficiencies at the grid management level. The loop flows originating from exchanges inside other bidding zones create uncertainty for which system operators take safety margins. In turn, these safety margins reduce the capacity available for commercial exchange. It is therefore important to closely monitor the level of loop flows.
Based on exchanges with Elia in winter 2018, loop flows in the day-ahead market coupling are overestimated by over 600 MW on average compared to the actual loop flows in real-time. While the loop flows in the basecase in 2018 amounted to 812 MW on average (see Table 23), it means that the actual loop flows in real time were ‘only’ around 212 MW on average. From this, one can conclude that commercial capacity is not only reduced by loop flows, but mainly by the forecast error on these loop flows. To make things worse, this forecast error also increases the FRM, which further reduces the commercial capacity. One of the identified measures to improve D-2 forecast accuracy is to include not only the best forecast of the load and production pattern in the basecase calculation, but the best forecast of what the actual production infeed is going to be. Those remedial actions will have to solve internal congestions detected in the basecase as their primary objective. As a welcome side-effect, those remedial actions will result in a reduction of loop flows in the basecase, closing the gap between the forecasted and actual loop flows. The requirement for including the best forecast of (costly) remedial actions is however not explicitly defined as mandatory in the current CWE FBMC, neither in the foreseen CORE FBMC. Tackling this forecast accuracy issue is identified by CREG as one of the key measures to further improve the functioning of the market coupling.
24 See Elia website, Data download, Category “Interconnection” on http://www.elia.be/en/grid-data/data-download
Figure 51 shows the loop flows through Belgium calculated by Elia and based on the D-2 data since the start of FBMC (May 2015 to December 2018). Most of the hours, the result of all loop flows generated in the CWE zones through Belgium flows in the North-South direction. Statistical indicators are presented in Table 23.
Table 23: Statistical indicators on the D-2 forecasted loop flows used in the CWE FBMC capacity calculation
In the last three months of 2018, forecasted loop flows in D-2 were a modest 4% lower compared to the same period in 2017 (Table 23). In the last three months of 2018, a sensible decrease of loop flows in the D-2 forecasts was expected because of the CWE TSO agreement on a more extensive use of the PSTs in the capacity calculation to reduce loop flows when adequacy risks in Belgium were expected and, more structurally, because of the introduction of the DE/LU-AT bidding zone border on 1 October 2018 (see also Section 4.2). This expected reduction may have been partially offset by the loss of one of the PSTs at the Belgian border. The maximum value recorded during those months was 2,065 MW, being sensibly lower than the 2,350 MW maximum recorded the same period in 2017. On 26 September 2018, a few days before the DE/LU-AT bidding zone split, a record value of 2,448 MW in the North-South direction was recorded. In March 2018 a record value in the South-North direction of -2345 MW was recorded, though this value is a clear outlier as can be deducted from Figure 52.
With further evolutions in the methodologies for capacity calculation and redispatching and countertrading methodologies in the CORE region, it is expected that the level of loop flows in the basecase will further reduce. As discussed in paragraph 72 above, improving forecast accuracy of the D-2 calculations will make a major contribution in reducing loop flows. This can be achieved by including not only the best forecast of the load and production pattern in the basecase calculation, but the best forecast of all remedial actions, both costly and non-costly.
2016 2017 2018 2016 2017 2018
Average 761 840 812 939 889 853
Minimum -1010 -504 -2345 -680 -295 -357
Maximum 2459 2413 2448 2459 2350 2065
Standard Deviation 519 513 459 549 492 421
P95 1443 1527 1413 1624 1546 1392
Entire year October - December
Figure 51:Maximum, minimum and monthly averaged loop flows through Belgium, forecasted in D-2. Positive values indicate loop flows in the direction North-to- South, negative values loop flows in the direction South-to-North.
Sources: Elia and CREG
Figure 52: Belgian day-ahead prices versus D-2 loop flows for all hours in the monitoring period July 2015 to December 2016 (turquoise), 2017 (dark blue) and 2018 (light blue). Positive loop flows indicate physical flows crossing the Belgian network from North to South. In 2018, price spikes above 200 €/MWh were only observed when the D-2 loop flows through Belgium were above 500 MW.
Sources: Elia and CREG
2440 2459 2350 2448
522
-1010 -504
-2345 -3,000
-2,000 -1,000 0 1,000 2,000 3,000
Max Average Min
MW
-100 0 100 200 300 400 500 600
-3,000 -2,000 -1,000 0 1,000 2,000 3,000
Belgian DAM Price (€/MWh)
Loop flows through Belgium in D-2 (MW)
2015-2016 2017 2018