ACER publishes today its annual report on the implementation of the Inter-Transmission System Operator Compensation (ITC) mechanism for 2023.
What is the ITC mechanism?
The ITC mechanism, coordinated by the European Network of Transmission System Operators for Electricity (ENTSO-E), compensates transmission system operators (TSOs) for the costs of hosting cross-border power flows, including power losses and infrastructure investments. This compensation is financed through the ITC Fund, also managed by ENTSO-E. European TSOs contribute and receive money from the ITC Fund depending on how much electricity they import and export across national borders, as well as on the volume of transits they carry through their networks.
In 2023, 35 parties participated in the mechanism, covering most of Europe.
ACER is responsible for overseeing the yearly implementation of the ITC mechanism and reporting its findings to the European Commission.
What are the report's key findings?
- In 2023, the ITC fund reached a record high of nearly €1.24 billion, marking the fifth consecutive year of record values, with a 105% increase compared to 2022.
- The cost of power losses between countries varied significantly.
- The average cost of losses rose by 165%.
- Denmark, Austria, Switzerland, Poland, Slovakia and Czechia received over 75% of the total net compensation, while Italy and Norway paid more than half of the total net contributions.
- Non-participating countries contributed €16.7 million.
- ENTSO-E improved its audit process incorporating ACER data, enhancing transparency and raising data quality standards.
What are the next steps?
ACER reiterates its recommendations for further improving the ITC mechanism, including:
- incorporating more granular information on the measured volume of losses;
- implementing ex-post reconciliation of loss costs; and
- using forward markets to determine the value of losses when their valuation and coverage are market-based.
