BrazilHow Magnus Energy contributes to an integrated EU electricity market
Since 2016, Magnus Energy has been the lead consulting company to two strategic programs in Europe’s electricity market design: the so-called Core CCR and the Core Joint programs. To understand more about what the programs aim to achieve and why they are so important for millions of Europeans, as well as Magnus Energy’s role in the whole, we spoke with partner Gertjan Meutgeert.
Gertjan, let’s start with the basics: what exactly do these European electricity market design programs entail?
To explain this, it might be best to first outline the types of parties that are involved in these programs. These programs are initiated by Transmission System Operators (TSOs) and Nominated Electricity Market Operators (NEMOs).
The TSOs are the ones that are responsible for building, maintaining, and operating the high voltage electricity lines in a country and make the electricity capacity available for trading. NEMOs are parties that enable trading of electricity on the wholesale market and are responsible for operating this market.
The EU aims at building a fully integrated energy union that gives European consumers – households and businesses – secure, sustainable, competitive, and affordable energy. European legislation has been issued to enhance collaboration between countries to work towards this common goal: realising increased integration of renewables on the grid, increased market functioning (social welfare) and increased security of supply of electricity.
To get from EU legislation to concrete improvements, Europe is divided into 8 geographical regions. These regions are called Capacity Calculation Regions (CCRs). In these regions, parties such as TSOs and NEMOs work together on complex programs to translate EU legislation into (1) methodologies and project plans, leading to (2) implementation, and resulting in (3) improved operation of the transmission, distribution, as well as trading in a specific region.
Core CCR is such a region and covers a large part of continental Europe: Austria, Belgium, Croatia, the Czech Republic, France, Germany, Hungary, Luxemburg, the Netherlands, Poland, Romania, Slovakia, and Slovenia. Within this region, 16 TSOs and 10 NEMOs are active. Together with those parties, we work on the Core CCR and the Core Joint programs.
To provide some context – how important are these two programs to the EU’s goal of building a fully integrated electricity market?
These two programs are very important as the Core CCR is the largest Capacity Calculation Region in Europe. These two programs help to ensure that building a fully integrated electricity market does not only remain a target but leads to actual implementations that work towards achieving this goal.
For a fully integrated electricity market in Europe, you need to make sure that electricity can flow freely and that it can be traded from one country in Europe to another without bottlenecks. This requires electricity capacities to be jointly calculated between countries and jointly offered to the EU electricity wholesale market. The two programs we work on, cover a significant part of Continental Europe and therefore can make a significant impact once improvements are implemented.
Having launched in 2016, what progress has been booked across the two programs? And what kind of tangible benefits for businesses and consumers has this unlocked to date?
Since 2016, many improvements related to capacity calculation have been developed and significant progress has been made over the past years to prepare concrete implementations.
The most significant milestone since 2016 was the implementation of Core Day-Ahead Flow-Based Market Coupling in June 2022. This is a method for jointly calculating and offering the available capacities for electricity trading between the 13 countries in the Core Rregion.
The main benefit is that there are more opportunities to trade electricity as more flexibility is given to traders to use the available capacities in line with the demand. This leads to an overall increase of the so called ‘social welfare’, which results in a better price for both wholesale producers and consumers, which in the end will lower the prices for end users as well.
As the dedicated Project Management Office, Magnus Energy plays a central role in the two programs. What are the firm's main responsibilities?
For both programs we work on, a program management organisation has been established. The program objectives are translated into sub-tasks and projects. Our main task is the overall program and project management, focusing on timely achievement of all project objectives, facilitating the decision-making process, and steering towards projects go-live.
In addition, we share our expertise by filling dedicated roles such as IT project management, providing test management, stakeholder management and business analysis support. Due to our wide array of knowledge and expertise, Magnus Energy can offer tailored support services depending on the program or project's needs.
“We are highly experienced with multicultural work environments. We support clients across Europe, and our team has 13 different nationalities.”
The pan-European programs span 13 countries. Based out of the Netherlands, how does Magnus Energy cater to the international character and needs of the project?
We are experienced in working in multicultural environments and are flexible in our way of working. We work for groups of clients officed across many different European countries, with the majority of our meetings and support conducted online. For our team, this means we work from our office in Naarden.
However, we also meet our clients physically multiple times throughout the year in one of the cities in Europe where representatives of all clients attend.
While we work from the Netherlands, we have 13 different nationalities in our team, and we also have hubs in Germany and Eastern Europe with senior experts working from these locations. With our well-rounded team, strong work ethic, and team-driven mentality, we can support our clients no matter the location we are working from.
In addition, our long-lasting relationships with our clients make a great difference to allow effective projects across many nationalities and geographical locations.
You’ve personally been involved with the two market design programs since the very start in 2016. What have from your perspective been the most fulfilling achievements and why?
The most fulfilling achievement is most definitely the aforementioned go-live of Core Day-Ahead Flow-Based Market Coupling. This was a highly complex and large project, and many people in the past believed it to be impossible to get this implemented.
When you then get the chance to work with 26 parties and highly knowledgeable experts, and together can bring this into operation, this is very fulfilling. Ensuring that ambitious targets and ideas on paper see the light makes all the blood, sweat and tears in the process towards this key milestone for sure all the worthwhile!
Looking ahead, I hope to bring many more pivotal projects to implementation to support the further advancement of the European energy transition.
