With the energy transition, European countries need more and more to rely on and coordinate with each other to guarantee security of supply and well-functioning markets. ENTSO-E favours the creation of "policy regions" to advance further on regional coordination of energy policies. Transmission system operators will on their side fulfil their commitment towards more cooperation in their area of expertise.

European customers would benefit immensely if energy mix, renewables support schemes, capacity mechanisms, planning of interconnectors, adequacy and risk preparedness would be discussed and coordinated regionally. Policy regions could make this happen without taking away the final decision-making from individual member states. For maximum efficiency, policy regions should gather representatives from ministries, regulators, transmission system operators, stakeholders as well as the EU institutions. Policy regions in Europe have already delivered successfully. Now it is time to expand, covering more parts of Europe and widen the scope.

"Policy regions are needed bringing political, regulatory and technical/ commercial competences together based on common values and common concerns. A history of cooperation and trust helps to speed up the integration process", Bente Hagem, Chair of the Board of ENTSO-E, suggests and continues "voluntary cooperation and manageable size should be guiding principles".  

Policy regions, like for example the Pentalateral Energy Forum or the Nordics, should not be confused with 'functional areas'. These functional areas like capacity calculation regions, bidding zones, regional service providers (RSPs), etc., are created to optimise a particular function in power system operation, market integration or infrastructure planning.

Often created on a voluntary basis by the TSOs, the existence of functional areas is now formalised in the EU legislation through the network codes process. In the coming days, RSPs like for example Coreso or TSC will be recognised in the to-be-voted System Operation Guideline. ENTSO-E and its members committed in 2015 to roll out RSPs throughout Europe by 2017. The five main services are capacity calculation, outage planning, short term adequacy forecast, coordination of operational security measures and the implementation of of a Common Grid Model software.

TSOs rely on a daily basis on RSPs in their decision-making. Their added-value will grow in a more interconnected system faced with more variation in power flows. ENTSO-E and its members are planning to develop RSPs' services over time. This development needs to remain flexible because the power system and market in Europe is changing fast and will continue facing very varied conditions.

 "TSOs want to move  forward on regional coordination", explains Peder Andreasen, President of ENTSO-E. "The  multilateral agreement signed in 2015 is a strong commitment towards even more regional cooperation among TSOs. However, we are reaching legal and regulatory limits". Peder Andreaesen adds that "to move further and  increase speed, policy regions are needed". Policy regions and functional areas with basis in the network codes shall develop in Europe in parallel. Functional areas and political regions can overlap, but do not need to. "On the contrary, efficiency and security call for several functional areas to serve multiple policy regions ", says Bente Hagem.

"In any case, we are in favour of a bottom-up, dynamic approach as opposed to drawing new artificial borders in Europe", concludes Konstantin Staschus, ENTSO-E Secretary-General.

For more explanation please read in our new policy paper on Regional Coordination and Governance in the Electricity Sector.

For more explanation please read in our new policy paper on Regional Coordination and Governance in the Electricity Sector.