1. What is the purpose of the transmission system?

The electrification system is an interconnected system and constitutes essential equipment for power production, transmission and distribution. The Czech power transmission system as
an important element in this system. Though it does not produce power and does not distribute it to end consumers, the availability of power for businesses and households depends on reliable operation. The lines and equipment belonging to the transmission system connects power plants with transformer stations. These are the interconnecting element between systems with different voltage levels. The Czech transmission system carries power of the highest voltage level:
400 and 220 kV. The individual regional distribution systems, that distribute power to end customers, work with lower voltage levels. The voltage taken from the transmission system is transformed into lower voltage in the transformer stations and power is then distributed to end customers.

2. What is a blackout? Can something like that really affect central Europe?

Imagine a dark town where not a single lamp, not a single light bulb are on. PCs, phones, TV sets, fridges do not work. Nothing works what needs electric power. But it does not end with this. A blackout would also terminate the heat, gas and water supply to households. During frosty days, homes will be cold already within two hours. Fuel stations also do not work without electricity. It is not the best idea to drive to a dark town like this, right? Dysfunctional traffic lights bring chaos to streets and experience from the US shows that the number of accidents and
the death toll rise steeply in scenarios like this one.

This is how we can outline the so-called blackout – a total or almost total interruption of
the power supply and a collapse of the power grid. Bad as this phenomenon is, the Czech Republic has never experienced it. But countries such as the United States, Italy, Brazil and recently also India have already seen this disaster.

The Czech transmission system was close to this collapse at the turn of 2011/2012 and also
in August 2012.

Electric power is an essential part of everyday life. Should there be a massive and long blackout, the water, gas and crude oil supply can be limited or stopped completely. Basic health care and basic supplies are no exception.

3. Is the Czech Republic threatened by a blackout? What are the causes?

For several years, the ČEPS controllers have been facing extreme situations caused by excessive power flows from northern Germany through the Czech Republic to the south of Europe. Such power flows exceed levels at which the transmission system can work safely. If any component of the transmission system fails, this system overloading could lead to a mass power outage – a blackout.

There are controlling tools through which unexpected issues in the transmission system can be immediately handled. The controllers have so far always successfully combined them, so there has never been a blackout in the Czech Republic. However, for the most part the controllers have been controlling the transmission system without meeting the so-called safety criterion N-1. This criterion guarantees robust operation of the transmission system even in case of a failure in any of its parts (e.g. power lines, transformer, power plant unit, etc.).


4. Why does ČEPS warn of a possible blackout, while nothing is actually happening?

Thanks to professional work of the ČEPS staff, all extreme situations in the transmission system could be handled – so far. To ensure sustainability, the situation must be however resolved in the long run. In the whole chain of cooperating power companies, ČEPS is the entity responsible. It is the entity that guarantees functionality of the backbone network and power supplies to distribution networks across the Czech Republic. It is our mission to ensure safe and reliable operation of the Czech transmission system. Anything that may compromise this mission must be addressed – especially if it is an external factor, which ČEPS can influence only indirectly.

5. What is the exact cause of the power flows through the Czech Republic?

There are multiple causes of these overflows. Unplanned transit power flows are the natural physical and technical consequence of a synchronous connection between transmission systems, which does not have, by definition, any negative impact on the reliable operation of power grids. However, for six years starting in 2010, we have seen an uncontrolled rise in these flows that have gradually burdened the ČEPS transmission network and caused many serious situations.

The main reasons why these overflows started threatening the Czech transmission system include a steep rise in power produced by the wind in locations concentrated in the north of Germany, combined with insufficient transmission capacity inside Germany. What makes the situation even worse is the shutdown of the first set of nuclear power plants in the north and south of Germany (over 8000 MW). And it does not end here: installed output of German photovoltaic power plants rose from 10,000 to more than 40,000 MW over the last years. During sunny days, the power produced by these rather small units causes the power produced by other conventional sources to be supplied to grids of higher voltage levels, including transmission system lines. Power trading practices also affect the current situation. The deals agreed within a single country or between two countries cause such physical power flows that certainly do not follow the trade routes of such market transaction.

Power always finds the easiest route, so for example power exported from Germany to Austria passes through Poland and the Czech Republic to a significant degree (up to 50%). The reason is that this route is easier for the electric power than a direct route inside Germany and then to Austria.

The current definition of trade zones in the Central and Eastern European Region (and the existence of the Germany-Austrian zone) allow such trade transactions on the power market, but these transactions significantly contribute to the phenomenon of critical power flows through the transmission systems of the Czech Republic and neighboring countries.

6. What areas in the Czech Republic are at risk of power outages caused by overflows from Germany? What are the realistic threats?

The most probable region where excess flows of electric power in the Czech Republic may cause a blackout is South-Western Bohemia. ČEPS has been doing everything in its power to control the flows and balance them among transmission lines that are not so heavily burdened.


 7. Can excess flows be prevented? What measures has ČEPS taken?

ČEPS has long been negotiating about excess flows on the European, regional as well as national levels. First of all, we promote more intensive coordination between European transmission systems and their controllers.

ČEPS works with a number of measures and new instruments to identify and forecast dangerous situations in the system. Numerous measures are available such as network reconfigurations that lower the risk of overloading on some lines. We can also change the output of specific power blocks (redispatching) to relieve the overloaded part of the transmission system. Reduced output in one part is compensated by increased output in another, less burdened part of the transmission system.

Under the bilateral operative cooperation agreement, we can request a neighboring state to cut production (for example the German provider 50Hertz can be asked to reduce production in areas close to our border and ČEPS then increases the output of domestic power plants connected to the Czech transmission system). Furthermore, overcurrent protection has been installed on the ČEPS-50Hertz interconnector and adjacent equipment since 2012 to prevent their destruction.

As the risk that critical situation will repeat in the future lasts, it is essential to boost the transmission systems in the Central and Eastern European region. ČEPS will invest over CZK 60 billion in the reinforcement and modernization of the domestic transmission system until 2025. The investments cover the modernization of substations, construction of new lines, reinforcement of existing lines and installation of phase-shifting transformers. New lines inside Germany connecting the German north (i.e. regions where wind power is concentrated) with
the south (i.e. regions where industrial consumption hubs are concentrated) would best relieve the Czech transmission system. Such transmission lines have been long on the paper in Germany, but their commissioning is a matter of many years: currently, the launch of key direct-current lines connecting north and south is scheduled to 2025. As the process is very complicated, the timely completion of these and other power lines is uncertain.

8. What is a phase-shifting transformer and how does it work?

A phase-shifting transformer (PST) is a system that changes the phase angle and thus allows the controllers to regulate power flows on the line (branches) to which it is connected. Reducing the flow on one network branch against other parallel branches will redistribute the flows (as
the power takes the route of the lowest resistance) and shift a portion of the flows to adjacent, less burdened lines.

The construction project for a PST in the Hradec substation was in the Transmission System Development Plan of the Czech Republic for 2013-2022, approved by the Ministry of Industry and Trade and the Energy Regulatory Office, and in June 2013 the Ministry of Industry and Trade confirmed the plan again by approving the investment proposal from the position of
the sole shareholder. In July 2013 a tender was announced for the PST delivery and supplier selection was completed in April 2014 with the signature of a PST delivery contract. Since January 2016 the different pieces of the PST equipment have been brought to the Hradec substation. The system installation and preparations for commissioning were carried out.

Due to the delayed delivery of the fourth PST unit, the device was commissioned only in part by January 2017, with two units now regulating flows on one power line of the Czech-German interconnector.

9. Why weren’t the PST units built as a joint project with the German transmission system operator 50Hertz?

ČEPS and 50Hertz have been dealing with overflows for years. The controllers of both companies have been closely cooperating. Due to growing trade exchange, particularly between Germany and Austria, steady growth of renewable sources, interrupted production in Germany and delays with the construction of the transmission network, the overflow issues have actually only become worse during the first years of this decade. ČEPS has repeatedly negotiated possible cooperation with 50Hertz and guarantee of cross-border flows within such limits that would be safe for the Czech transmission system. Possibilities of a joint PST construction on
the ČEPS–50Hertz interconnector were also discussed. The discussion was however opened only at a time when ČEPS had already been preparing its own PST in the switching station in Hradec.

Bilateral negotiations, also on the level of competent ministries and regulation authorities, had not led to any agreement that would be acceptable for both parties. As time was the number one factor and the facility had to be put into operation by the end of 2016, ČEPS had continued with its own project and in July 2013 it announced a tender for device acquisition for the installation of its own PSTs in the Hradec substation.

November 2013 was the breaking point in the negotiations: the ČEPS and 50Hertz boards agreed to a joint solution. Both companies were to build PST systems in the switching stations of Hradec and Röhrsdorf. The Hradec-based PST would keep cross-border flows within safe limits and secure a safe and reliable transmission system operation on the Czech side, while
the Röhrsdorf-based PST would rectify flows in the southern section of the 50Hertz regulation zone. When the agreement was signed, both PSTs were supposed to be put into operation by the end of 2016. There was however a delay on the German side, so the PST commissioning at the substation in Röhrsdorf is now expected at the end of 2017 (the 1st part of the project) and the end of 2019 (the 2nd part). Full implementation of this joint solution was also conditioned by a mutual agreement on the PST operation. A memorandum about the basic principles of coordinated operation was the first step in this direction, taken in March 2014. When all PSTs are commissioned on both sides of the border, the memorandum will be replaced by an agreement that will amend the existing bilateral operating agreement.

10. What preceded the decision about the PST construction? Is this important decision well-founded?

The PST construction project inside the ČEPS system on lines connected to 50Hertz responds to the European Wind Integration Study (EWIS). This study of May 2010 identified serious safety loopholes in the operation of central European transmission systems, caused by growing supplies from wind power plants in the north of Germany combined with business activities within the German-Austrian trade zone. The study pointed out the need for PST construction on both German eastern profiles. The study assumed that in 2015 the trade flows between Germany and Austria will reach a volume of 5500 MW. This value was however exceeded already in the summer of 2012 by 1800 MW!

ČEPS started preparations for the PST project already in 2010. Independent consulting firms prepared overflow development studies and their impact on the safe operation of
the transmission system in the Czech Republic. The studies clearly recommended using this tool to regulate the flows on the profile with 50Hertz. ČEPS therefore prepared a tender documentation and technical specifications for system acquisition and purchased the land needed for transformers in the Hradec substation. A tender for the system was announced and followed by other tenders for general contractor. The project also underwent the standard zoning and building permit proceedings. Two units connected in parallel are currently in operation on one line, testing of the third unit has been completed and operational testing of the fourth one is underway.

The phase-shifting transformers are a standard tool of the electricity flow regulation; they have worked successfully on cross-border lines between Germany and the Benelux countries and since June 2016 they control power flows also on the border between Germany and Poland.

11. Could the power overflows be predicted and measures taken before?

The European transmission systems are interconnected and affected by a number of factors, some of which cannot be foreseen. It is therefore difficult and extremely costly to prepare for them (e.g. the German final decision to turn away from the nuclear power was taken in a matter of months).

Information on problems related with a steep rise in power production from sources with interrupted production characteristics (depending on current weather), particularly wind farms and photovoltaic power plants, was available early enough in Europe thanks to model calculations.

Published in April 2010, the EWIS study indicated serious operation troubles for systems of countries adjacent to Germany, including the Czech Republic. The trouble was forecasted to arise after 2015. The events of recent years have however shown that the problems appeared much earlier and to a much greater extent than what had been expected.

Liberalization of the power market and a massive development of renewable resources were not accompanied by adequate investments in local networks in Germany in due course.

Building the transmission infrastructure is a very lengthy process. Due to long approval processes, construction preparations for a new line take ten years on average. This applies to the Czech Republic and other European countries as well.

12. What are the consequences of power overflows for the Czech transmission system?

  • they compromise reliable operation of the electrification system;
    - they exceed limits acceptable for cross-border power transmission (the power volume
         crossing the Czech border is usually up to 1000 MW, while the values rise to 3500 MW
         during critical periods;
    - they push certain parts of the transmission system to their limits;
    • they restrict cross-border trade and create a discriminatory environment for market participants;
      - they respect only the laws of physics (electric power flows through the easiest route), so they do not compete for cross-border transmission capacities with other trade transactions within the region;
  • they require special measures, mostly redispatching (changing the power plant output when needed reduces the risk of overstressing the lines and seeing a systemic collapse);
  • they entail high costs connected with activation of special measures.


13. Do other countries in Europe face similar power overflow issues?

Absolutely. Overflows are an issue of the entire continental Europe. Besides the Czech Republic, within the Central and Eastern European Region the transmission systems of Poland, Slovakia and Hungary, but also the Netherlands and Belgium (they have however been using phase-shifting transformers on their borders already for over a decade) are pushed to their limits.

Excess flows arrive for instance when electric power produced in northern Germany finds
a buyer as far as in the Balkans (typically in the event of a lack of water for local water power plants). In this scenario, electric power flows from Germany via a bypass route through
the transmission systems of the Czech Republic, Poland, Slovakia and Hungary.

14. Is ČEPS receiving financial compensation for these problems?

Based on the single European market rules, no transit country is allowed to charge fees for power flows arising from international power trading – unlike in, for example, car traffic (motorway stickers, road toll gates, etc.) The cost, which transmission systems providers incur as a result of power transit through their systems, is spread based on a uniform methodology following the multilateral agreement administered by the European Network of Transmission System Operators (ENTSO-E) within the so-called Inter-Transmission System Operator Compensation Mechanism (ITC), Regulation (EU) No 838/2010). Under this mechanism,
the transmission system operators are compensated for the use of their infrastructure, as well as for the costs of losses in the transmission system as a result of international cross-border trade exchange. The compensation amounts depend on the power summary balance of the participants to this mechanism. While the finances covering losses vary and take the actual operating conditions in interconnected European networks during the respective period into account, the funds covering infrastructure costs are fixed and amount to EUR 100 million.
The costs of the ITC mechanism are calculated through national tariffs to consumers of the exporting and/or importing country.

When the ITC mechanism was introduced, this balance of expenditures and revenue for ČEPS, i.e. the Czech Republic, was negative. Since 2014, ČEPS has mostly been a net recipient of these contributions from ITC. The reason is the situation typical for the Czech transmission system and neighboring systems, where transit flows through the Czech transmission system have risen dramatically and the resulting drop in the Czech Republic’s export balance. The ITC mechanism currently provides ČEPS with a partial financial compensation for issues related to power overflows.

15. Why is ČEPS criticizing the existence of the German-Austrian trade zone?

The current market setting of the German-Austrian region for power trading allows such a trade exchange that exceeds the physical possibilities of the interconnected German and Austrian transmission systems. When a trade is implemented, the power flows are “pushed” out into
the transmission systems of Poland and the Czech Republic on one side and the Netherlands and Belgium on the other side. Electric power then bypasses these transmission systems when it returns back to Germany and Austria.

Besides the fact that power flows burden the Czech transmission system, they also reduce
the tradable cross-border capacity on the Czech border, thus restricting business activities in
the Czech Republic. Traders have found themselves in situations when they may be discriminated due to the mere existence of the trade zone between Germany and Austria.
ČEPS therefore seeks to change the trade zone definition, so that the transactions cannot exceed the physical capacity of the interconnected transmission systems.

A split of the single German-Austrian trading zone and respecting the transmission possibilities of neighboring systems when entering into a trade deal between these zones would solve
the situation. The providers of other transmission systems from Poland, Slovakia and Hungary came to the same conclusion.

The European Agency for Cooperation of Energy Regulators (ACER) also agreed with
the arguments of ČEPS: it was dealing with a suggestion of the Polish regulation authority and issued a statement in September 2015 in which it acknowledged that the current regime on
the German-Austrian border causes bottlenecks in neighboring transmission systems and came to the conclusion that a capacity assignment process must be introduced on this border and coordinated across the Central and Eastern European Region (CEE). The agency said that EU rules are actually being breached in the current system, because the German-Austrian border is excluded from this coordinated cross-border capacity calculation system. The agency called, among other things, for incorporating this border into the coordinated calculation and capacity assignment in the CEE region, so it actually called for splitting the German and Austrian zone. In November 2016, the agency came to the same conclusion also in the case of the recently created Core capacity calculation region, when it issued its legally binding decision.

Even with the Austrian authorities refusing to accept this decision and the local transmission system operator having contested the decision before the Court of Justice of the EU, a certain shift has been noted with regard to the initiative of the German regulator, which in October 2016 called on the German transmission system operators to prepare for the introduction of congestion management on the German-Austrian border since July 2018. In May 2017, the joint agreement between the German and Austrian regulators postponed this step to October 2018 and attached further measures to it, most notably, the inclusion of the German-Austrian border into the CWE flow-based capacity calculation system in Western Europe.

For ČEPS, this latest agreement is unacceptable. It means no significant improvement over
the current state and its adoption did not include any reflection on the impact of such a step on the neighboring systems or the functioning of the electricity market in Central Europe. Moreover, from the perspective of ČEPS, this is a violation of European rules, including a request from ACER to coordinate trade on the German-Austrian border as part of Core trade region.

16. What shall be done to prevent overflows and a blackout?

The thing is not to prevent overflows, because they cannot be prevented in interconnected systems, but to keep them within safe limits. From the perspective of ČEPS, the foremost priority is to eliminate causes of overflows, particularly the disproportion between massive investments in renewable resources and insufficient development of the network transmission capacity.

The problem solution lies in Germany (insufficient connection between the south and north). In the coming years, the Czech transmission system will be also facing renovations and capacity enhancement due to overflows from Germany. ČEPS is planning to invest dozens of billions of Czech crowns in the transmission system in the coming years.

Construction of power transmission infrastructure is however a very lengthy process. This is why ČEPS concentrates primarily on short-term and medium-term measures that would significantly reduce the risk of overflows. This involves activities leading to the split of the German-Austrian trading zone and introducing a market-based overloading control on the German-Austrian border including technical measures within the Czech transmission system.

The ČEPS policy for tackling overflows includes installations of phase-shifting transformers on the cross-border interconnector with 50Hertz, the transmission system operator in the eastern part of Germany.

17. How does ČEPS evaluate the functioning of the PSTs in the Hradec substation so far?

ČEPS evaluates the partial launch of the PSTs in the Hradec substation in January 2017 very positively. The transformers have demonstrated their ability to effectively regulate flows on the German-Czech interconnector and thus ensure the protection of the Czech Republic’s transmission system in all circumstances. In addition, we have been able to help our neighbors optimize the flows in their network when needed by regulating with the PSTs.

18. Wasn’t the investment into the PSTs too much?

The total costs of ČEPS for the PST Hradec investment project amounted to roughly two billion Czech crowns. This investment had been thoroughly analyzed and confirmed by
the Ministry of Industry and Trade and the ERO. The decision for its implementation was based on the belief that there is no other – and cheaper – alternative to PST Hradec that would ensure the safe operation of our system.

The first five months of 2017 confirmed that this was a good investment, as the PST regulation prevented the need to adopt further corrective measures, especially of the cost type. Expected savings of tens of millions of crowns were achieved already in the first few months, even with only partial PST operation.

The evaluation of the impact of the PSTs in relation to ČEPS costs for remedial measures will be carried out regularly only after the commissioning of all four Hradec PST devices.