Who gets the rights to trade across borders?

Abstract

In the second chapter of this book, we cover the European experience of the allocation of the rights to trade across borders, i.e. transmission rights. We answer five questions. First, how to deal with historical privileges? Who had privileged access and how did it end? Second, how to implement the market-based allocation of transmission rights? We describe the evolution from explicit to implicit auctions for transmission rights, also referred to as market coupling. Third, how to implement market coupling in the day-ahead timeframe? After several regional initiatives, one became the target model but several open issues remain. Fourth, what about the timeframes before day-ahead? A dominant model seems to be emerging. Fifth, what about the timeframes after day-ahead? It seems the mood is changing from continuous trade to auctions. The chapter ends with a conclusion in which we summarize our main points.