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Issue title:

Efficient network extension

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In this edition I'll be taking you on a rather in-depth journey into network development planning. This is not even motivated by entirely new developments. Already in February, Initiative Erdgasspeicher (INES), the association of storage operators, published a study on congestion management within market areas. Also, the Higher Regional Court (OLG) of Düsseldorf held a hearing on the complaint of EnBW against the Scenario Framework for the Network Development Plan (NEP) 2020 to 2030. EnBW has complained that the modelling for its three new power plant projects is based on dynamically allocable capacity (DZK), and not on firm freely allocable capacity (FZK). I assume that you are all familiar with these capacity products. Nevertheless, it will be explained in the story (I occasionally get BZK and DZK mixed up).

However, the March edition was already rather full, and I wasn't quite sure how to deal with these rather sophisticated topics in that edition. Thus, I decided to elaborate in more detail on these topics in the April edition. The OLG hearing was, from an intellectual viewpoint, a good event, and it was the first virtual hearing of the senate (only me and the judges were in the courtroom, all other participants were on a screen). But it is my conviction that the question of what the proper instruments are to replace steel for network extension by intelligence, i.e. an optimised network utilisation, will be on the agenda for future network development. The TSOs themselves triggered this not really new discussion by introducing market-based instruments (MBIs) to avoid physical network extension related to the market area merger. But of course, the question of the necessary network extension for natural gas in times of energy transition will also play a role.

TOPIC OF THE MONTH Efficient network extensionAn old topic: Some history

The question of efficient network extension is at least as old as network planning under regulatory guidance. This network planning will celebrate its 10th anniversary on August 22. On that day ten years ago, Prognos, a consultancy, published the first consultation document of the Scenario Framework for the Network Development Plan (NEP) 2012 of the German TSOs. Already in the consultation for the first NEP, there had been discussions on whether network extension based on the complete provision of firm freely allocable capacity (FZK) on all bookable entry and exit point is economically efficient. In its NEP consultation questionnaire for the 2012 NEP, BNetzA explicitly raised this question.

During the consultation process for NEP 2012, separate workshops for power plant operators and storage operators were organised. During the workshops, the TSOs presented their concepts of dynamically allocable capacity (DZK) as a "power plant capacity product" and temperature related capacity (TaK) as a "storage capacity product". The main purpose was to model the necessary, more precise efficient network extension for new power plants and storage facilities. But the necessary capacity for already existing plants and facilities should also be determined based on these restricted capacity products. The so-called "separation model" was applied. The capacity products used for the modelling should not predetermine the offer of capacity products to the plant operators or storage users in the capacity marketing process. But this separation was always a bit artificial. After years of discussing the proper design and application of TaK, things went quiet regarding this product - it seems to have been accepted. In February, DZK was the subject of a hearing at the Higher Regional Court (OLG) of Dusseldorf, one of the concrete reasons for this report. More about the court procedure later.