Congestion income originates in the situation where transmission capacity between bidding areas is not large enough in order to fulfill the demand. In that case bidding areas diverge into different price areas and the power exchange receives bottleneck income in following way:
bottleneck income [€/h] = Elspot-trade [MW] * area price difference [€/MWh]
TA seller acting in a lower price area receives lower price for electricity compared to the price the other party pays for electricity in the other area. In this case power exchange receives surplus income, which it then pays to the Transmission System Organizations (TSOs).
Nordic congestion income is shared among the four Nordic TSOs (Energinet.dk, Statnett, Svenska Kraftnät, and Fingrid) based on a common agreement. The current agreement came into force in September 2006 and runs until the end of year 2011.
The income is shared using two formulas:
|
Formula 1:
|
Energinet.dk 31,91%
|
This system of sharing is based on cost estimation of the Five Prioritized Projects within Nordel to strengthen the Nordic grid. The estimated cost of each project was calculated and shared between the countries involved in that project. Then the share of each country was compared to the total cost of all five projects. Through that, the final per cent value each country will receive of the congestion income was decided.
|
Formula 2:
|
The congestion income per connection is divided in two equal shares between the two affected TSOs. The affected parties may agree on a different distribution on specific connections bilaterally, but shall then inform the other TSOs about these arrangements. |
In the agreement there is a stepwise changeover from Formula 1 to Formula 2.
|
Period of time |
Formula 1
|
Formula 2
|
|
01.09.2006-30.09.2007 |
100% |
0%
|
|
01.10.2007-26.10.2008 |
75% |
25% |
|
27.10.2008-15.11.2009 |
50% |
50% |
|
16.11.2009-05.12.2010 |
25% |
75% |
|
06.12.2010-31.12.2011 |
0% |
100% |
On interconnector Estlink, congestion income is only generated on the part of the interconnector that is rented by the TSOs (Fingrid and Elering) for Elspot trade between the countries. The rent of interconnector is comprised of the congestion income received by the TSOs, and it is shared among the owners of the link based on the shares of ownership.
Fingrid spends the received congestion income on increasing the transmission capacity on its border interconnectors according to the EU regulation. Early in 2000s in two years the income was used on lowering grid tariffs as is shown below. Historically, bottleneck income has been higher than the investments, but this trend is about to change and the investments will exceed the bottleneck income in coming years.
|
|
Bottleneck
|
Bottleneck income
|
The investments
|
Congestion income
|
|
|
M€
|
M€
|
M€
|
M€
|
|
1998
|
0 |
1.1
|
0.1
|
1.0
|
|
1999 |
0 |
2.3
|
|
3.3
|
|
2000 |
8.1 |
9.7 |
|
13.0
|
|
2001 |
0 |
3.7 |
15.3 |
1.4
|
|
2002 |
2.9 |
13.7 |
|
15.1
|
|
2003 |
0 |
14.6 |
1.5 |
28.2
|
|
2004 |
0 |
7.9 |
8.7
|
27.4
|
|
2005 |
0 |
15.4 |
|
42.8
|
|
2006 |
0 |
13.1 |
|
55.9
|
|
2007 |
0 |
21.3 |
3.3 |
73.9
|
|
2008 |
0 |
23.2 |
10.7
|
86.4
|
|
2009 |
0 |
4.9 |
37.9
|
53.4
|
|
2010 |
|
|
|
|
|
2011 |
|
|
|
|
|
2012 |
|
|
|
|
|
total |
11.0 |
130.9 |
77.5 |
|
* The costs of the investments have been set on the year the project in question has been finished.