The Guideline on Forward Capacity Allocation (the FCA Regulation) lays down detailed rules on cross-zonal capacity calculation and allocation in the forward timeframe. It requires that TSOs establish a common methodology to calculate long-term cross-zonal capacity, harmonise the rules for allocation of long term transmission rights and establish a single platform at European level for allocating long-term transmission rights. The FCA Regulation entered into force on 17 October 2016. You can find the FCA Regulation here.
The FCA Regulation has been developed pursuant to the network code development process established by Article 6 of the Regulation (EC) 714/2009. This means that it was developed in strong coordination between ENTSO-E, the Agency and stakeholders. It was later changed into a Commission guideline and adopted on the basis of Article 18 of Regulation (EC) 714/2009. You can find more about the historical development of the FCA Regulation here.
The FCA Regulation defines binding requirements for Transmission System Operators (TSOs), National Regulatory Authorities (NRAs) and the Agency for the implementation and functioning of an integrated electricity market in the forward timeframe. The core elements of the FCA Regulation are:
Forward calculation of capacities between bidding zones. Long-term capacity calculation for the year- and month-ahead market time frames should be coordinated by the TSOs to ensure that capacity calculation is reliable and that optimal capacity is made available to the market. For this purpose, TSOs are obliged to establish a common grid model by gathering all the necessary data for the long-term capacity calculation and taking into account the uncertainties inherent to the long-term time frames. The coordinated net transmission capacity (CNTC) based approach should apply to calculate and allocate the long-term cross-zonal capacities. The flow-based approach might be applied where the cross-zonal capacities between bidding zones are highly interdependent and the approach is justified from an economic and efficiency point of view.
Forward allocation of cross-zonal capacities. Currently there are multiple allocation rules across the Union governing the contractual arrangements for long-term transmission rights (LTTRs). TSOs are obliged to develop harmonised allocation rules (HAR) for physical transmission rights (PTRs), financial transmission rights — options (FTRs — options) and financial transmission rights — obligations (FTRs — obligations) at the Union level. Those HAR should at least contain the description of the allocation process/procedure for LTTRs (explicit auction), including the minimum requirements for participation, financial matters, type of products offered in explicit auctions, nomination rules, curtailment and compensation rules, rules for market participants in case they are transferring their long-term transmission rights, the use-it-or-sell-it (UIOSI) principle, rules as regards force majeure and liability. Those HAR should also outline the contractual obligations to be respected by market participants.
Establishment of a Single Allocation Platform. The HAR require the establishment and operation of a single allocation platform (SAP) at European level. This central platform should be developed by all TSOs to facilitate the allocation of LTTRs for market participants and should provide for the transfer of LTTRs from one eligible market participant to another. In order to allow a transparent and non-discriminatory allocation of long-term transmission rights, the SAP needs to publish all the relevant information about the explicit auction for the forward allocation before its opening.
The FCA Regulation provides also many other requirements which essentially support the above mentioned main activities.