1. Introduction

Interconnector congestion management governance refers to the legal, regulatory, institutional and technical arrangements used to manage situations where demand for cross-border electricity transmission exceeds the available physical transmission capacity of an interconnector.

An electricity interconnector connects two electricity systems or bidding zones. When electricity prices, generation patterns or demand differ between the connected zones, electricity tends to flow from the lower-price area towards the higher-price area. If the available transmission capacity is insufficient, congestion arises.

Congestion management therefore has two related objectives:

maintaining system security, by ensuring that transmission limits are not exceeded; and

maximising legitimate cross-border electricity trade, so that scarce interconnection capacity is allocated transparently, efficiently and without discrimination.

In the EU, this governance framework is particularly developed through Regulation (EU) 2019/943 and the Capacity Allocation and Congestion Management (CACM) Regulation 2015/1222. Regulation 2019/943 requires congestion to be addressed through non-discriminatory, market-based mechanisms and places significant responsibilities on transmission system operators (TSOs), national regulatory authorities and ACER. (EUR-Lex)

2. Meaning of Interconnector Congestion

Suppose an interconnector between Country A and Country B can safely transmit 1,000 MW, but market participants collectively seek to transfer 1,500 MW.

The 500 MW difference represents a congestion problem.

Congestion may arise because of:

insufficient interconnector capacity;

transmission-network bottlenecks;

unexpected generation or demand;

outages;

loop flows;

internal network constraints affecting cross-border exchanges;

renewable generation variability;

inaccurate capacity forecasting; or

inadequate coordination between neighbouring TSOs.

Importantly, congestion is not necessarily a physical failure. It can be a scarcity of economically usable transmission capacity.

3. Legal Objectives of Congestion Management

The governance framework seeks to balance several interests.

A. Security of supply

Interconnector capacity cannot simply be maximised regardless of physical network limitations. TSOs must respect operational security limits.

B. Efficient electricity markets

Scarce cross-border capacity should generally be allocated to market participants who value it most.

C. Non-discrimination

Capacity allocation cannot favour particular traders, generators or national interests without a lawful justification.

D. Cross-border competition

Congestion management should prevent national network constraints from unnecessarily fragmenting the internal electricity market.

E. Transparency

Market participants must be able to understand how available capacity is calculated and allocated.

F. Investment incentives

Congestion revenues and regulatory arrangements should encourage appropriate investment in additional interconnection capacity and network reinforcement.

The EU framework expressly provides that congestion should be addressed through non-discriminatory market-based solutions that provide efficient economic signals. (EUR-Lex)

4. Institutional Governance Structure

Interconnector congestion management is not performed by a single institution. It is a multi-level governance system.

A. Transmission System Operators

TSOs are the principal operational actors.

They are responsible for:

calculating available cross-zonal capacity;

monitoring network security;

identifying constraints;

coordinating with neighbouring TSOs;

implementing remedial actions;

providing capacity to the market;

managing outages;

redispatching generation where necessary; and

providing information to regulators and market participants.

Under the CACM framework, capacity calculation is coordinated between TSOs rather than being determined solely from the perspective of one national network. (EUR-Lex)

B. National Regulatory Authorities

National regulatory authorities supervise the TSOs and approve or review important methodologies.

Their functions include:

approving capacity-calculation methodologies;

supervising congestion-management arrangements;

monitoring compliance;

reviewing congestion revenues;

addressing disputes;

ensuring non-discriminatory access; and

cooperating with regulators in neighbouring jurisdictions.

Because an interconnector normally affects at least two regulatory jurisdictions, national regulators must cooperate rather than treating congestion exclusively as a domestic matter.

C. ACER

The Agency for the Cooperation of Energy Regulators (ACER) provides an important regional and EU-level governance function.

ACER becomes particularly significant where:

national regulatory authorities cannot agree;

methodologies have regional implications;

cross-border coordination is necessary; or

an ACER decision is challenged before the EU courts.

The CACM framework provides for common methodologies and regional coordination, while Regulation 2019/943 gives ACER a role in resolving certain regulatory disagreements. (EUR-Lex)

D. European Commission

The European Commission establishes the broader legislative and regulatory framework through EU regulations and network-code mechanisms.

The Commission's role is therefore primarily systemic and legislative, while TSOs perform much of the real-time operational work.

5. Capacity Calculation as a Governance Function

A central question is:

How much electricity can safely cross the interconnector?

This is more complicated than simply looking at the physical rating of an interconnector.

Electricity flows through interconnected networks according to physical laws. A transaction between two bidding zones can therefore affect network elements located elsewhere.

The CACM Regulation requires coordinated capacity calculation and provides for a common grid model representing the interconnected electricity system. It also recognises flow-based capacity calculation, which accounts for the fact that electricity can travel through multiple network paths. (EUR-Lex)

Flow-Based Method

A simplified representation is:

Available transfer capacity → network constraints → power-transfer distribution factors → feasible cross-zonal exchanges

The governance problem is that the methodology determining these values can substantially influence how much cross-border trade is possible.

Consequently, capacity calculation is not merely an engineering exercise. It has significant legal and economic consequences.

6. Congestion Management Methods

A. Explicit Auctions

Under an explicit auction, transmission capacity itself is auctioned.

A market participant may acquire the right to transmit electricity across the interconnector, while energy is traded separately.

This approach was historically important in European cross-border electricity markets.

B. Implicit Auctions

Under implicit allocation, electricity and transmission capacity are allocated together.

For example:

Zone A electricity price = €50/MWh

Zone B electricity price = €80/MWh

If sufficient interconnector capacity exists, electricity can flow from A to B.

If the interconnector becomes congested, the market-coupling mechanism allocates scarce capacity through the market-clearing process.

The CACM framework promotes implicit allocation for integrated day-ahead and intraday markets. (EUR-Lex)

C. Market Coupling

Market coupling links electricity markets across bidding zones.

Instead of treating interconnector capacity as an isolated product, the market algorithm simultaneously considers:

generation offers;

consumer bids;

available cross-zonal capacity; and

network constraints.

This helps electricity generally flow from lower-price areas towards higher-price areas when transmission capacity permits.

ACER describes market coupling as a central component of EU capacity allocation and congestion management. (Acer Europe)

7. Redispatching and Countertrading

Congestion can also be managed through remedial actions.

Redispatching

The TSO changes the output of generation or demand resources to relieve network constraints.

For example:

Generator A is reduced by 200 MW.

Generator B is increased by 200 MW.

The physical flow on the congested network element is thereby reduced.

Countertrading

The TSO enters into transactions designed to counteract undesirable physical flows.

EU rules recognise coordinated redispatching and countertrading as important tools for managing congestion and increasing available cross-zonal capacity. (EUR-Lex)

8. Governance of Internal Network Constraints

One of the most difficult legal questions is whether a TSO can reduce cross-border capacity because of a constraint inside its own national network.

This creates a potential conflict:

Domestic network security
versus
European cross-border market integration

Article 16 of Regulation 2019/943 addresses this issue by preventing TSOs from simply limiting interconnection capacity as a means of solving congestion located inside their own bidding zone, subject to the regulatory framework and applicable derogations. (EUR-Lex)

This principle is fundamental because otherwise a country could preserve national network security by systematically reducing the capacity available to neighbouring markets.

9. Bidding Zones and Structural Congestion

Where congestion is persistent rather than temporary, simply auctioning scarce capacity may not be sufficient.

Regulation 2019/943 therefore connects congestion governance with bidding-zone configuration.

A bidding zone should not normally contain long-term structural congestion that unnecessarily restricts cross-zonal trade.

Member States must take appropriate measures to address structural congestion, while bidding-zone reviews can be used to examine alternative configurations. (EUR-Lex)

This creates an important hierarchy:

Short-term congestion → market allocation/remedial actions

Persistent structural congestion → network reinforcement, optimisation, action plans or bidding-zone review

10. Congestion Revenues

When interconnector capacity is scarce, different prices between bidding zones can produce congestion income.

For example:

Zone A = €40/MWh

Zone B = €100/MWh

The price difference multiplied by the allocated cross-border volume can produce congestion revenue.

EU law places restrictions on how these revenues may be used.

Under Article 19 of Regulation 2019/943, priority is given to:

guaranteeing the actual availability of allocated capacity; and

maintaining or increasing cross-zonal capacity, including through appropriate network investments.

Only after those objectives have been adequately addressed can residual revenues be treated in other ways within the regulatory framework. (EUR-Lex)

Thus, congestion revenue is not simply unrestricted income for a TSO.

11. Case Law

Case 1: BNetzA and Germany v ACER, Joined Cases T-600/23 and T-612/23

This is one of the most directly relevant recent authorities.

The litigation concerned the Core capacity calculation region, involving numerous European countries, and challenged ACER's approach to common methodologies for calculating day-ahead and intraday cross-zonal capacity. The dispute concerned, among other things, internal critical network elements and the use of power-transfer distribution factors (PTDFs). (curia)

The General Court delivered judgment on 1 October 2025.

It annulled parts of ACER's Board of Appeal decision concerning the regional capacity-calculation methodologies. (InfoCuria)

Legal significance

The Court emphasised that the specific provisions governing capacity allocation and congestion management in Articles 15 and 16 of Regulation 2019/943 operate as special rules and cannot simply be displaced by a generalized preference for economically cost-effective solutions. (InfoCuria)

Governance lesson

The case demonstrates that:

Technical capacity-calculation methodologies must remain within the specific legal boundaries established by the EU legislature.

Regulatory agencies cannot necessarily expand their methodological authority merely by invoking general objectives such as economic efficiency.

12. Polskie Sieci Elektroenergetyczne v ACER, Case T-483/21

Another important case is T-483/21, Polskie Sieci Elektroenergetyczne v ACER, decided by the General Court on 25 September 2024.

The case concerned regional coordination of operational security and the identification and coordination of remedial actions having cross-border relevance. (curia)

The Court upheld ACER's approach concerning the scope of compulsory regional coordination.

It recognised that cross-border congestion and security problems cannot always be managed purely by individual TSOs acting independently. Certain remedial actions require regional coordination because their effects extend beyond a single control area. (Bailii)

Legal significance

The judgment supports an important governance principle:

Physical electricity networks are interconnected → therefore legal governance must also be interconnected.

A national TSO cannot necessarily treat a cross-border network problem as exclusively domestic.

13. Relationship Between the Two Cases

The two cases illustrate complementary aspects of congestion governance.

Together, these authorities demonstrate that EU electricity governance involves both regional coordination and legal limits on regulatory discretion.

14. The Role of Transparency

Congestion management requires extensive information.

Market participants need information concerning:

available capacity;

outages;

capacity calculation methodologies;

allocation rules;

congestion levels;

redispatching;

countertrading;

congestion revenues; and

changes to bidding-zone configurations.

Transparency reduces opportunities for discriminatory allocation and allows market participants to challenge potentially unlawful restrictions.

The CACM Regulation consequently requires common methodologies and information arrangements supporting coordinated capacity calculation and market coupling. (EUR-Lex)

15. Non-Discrimination and Equal Access

An interconnector is a strategically important infrastructure asset.

If capacity is allocated preferentially to a particular undertaking, generator or trader, competition can be distorted.

Therefore governance normally requires:

objective allocation rules;

transparent procedures;

equal access;

market-based allocation;

published methodologies;

regulatory supervision; and

avenues for review or appeal.

Regulation 2019/943 expressly requires congestion to be addressed through non-discriminatory market-based solutions. (EUR-Lex)

16. Emergency Situations

Normal market mechanisms cannot always be followed without modification.

Examples include:

sudden interconnector outages;

extreme weather;

major generation failures;

system instability;

frequency emergencies;

cyber incidents; and

cascading network failures.

During such circumstances, TSOs may need to take immediate operational measures.

However, emergency powers should remain subject to:

necessity;

proportionality;

transparency;

technical justification;

regulatory oversight; and

restoration of normal market arrangements as soon as possible.

The governance challenge is therefore to prevent temporary emergency measures from becoming a mechanism for permanent restriction of cross-border trade.

17. Interconnector Congestion and Energy Security

Interconnectors create both security benefits and security risks.

Benefits

Interconnection allows:

electricity imports during domestic shortages;

balancing across countries;

integration of renewable energy;

sharing of reserve resources;

diversification of electricity supply; and

greater market liquidity.

Risks

Heavy dependence on an interconnector may expose systems to:

outages;

geopolitical disputes;

cyberattacks;

physical attacks;

extreme weather;

simultaneous regional shortages.

Consequently, congestion governance must balance market integration with system resilience.

18. Key Governance Principles

A coherent legal framework for interconnector congestion management should therefore incorporate the following principles:

1. Market-based allocation

Scarce capacity should generally be allocated through transparent market mechanisms.

2. Non-discrimination

Comparable market participants should have equal access to interconnection capacity.

3. Security

Capacity calculations must respect physical and operational security limits.

4. Regional coordination

Cross-border congestion should not be managed exclusively from a national perspective.

5. Transparency

Capacity calculations and remedial actions should be sufficiently transparent to allow market participants and regulators to scrutinise them.

6. Proportionality

Restrictions on cross-border trade should not exceed what is technically necessary.

7. Regulatory accountability

TSOs and regional bodies should remain subject to regulatory supervision.

8. Efficient investment

Persistent congestion should create incentives for network reinforcement or appropriate structural reform.

9. Legal certainty

Capacity-calculation methodologies must remain within the authority granted by legislation.

10. Consumer welfare

The ultimate regulatory objective is not simply maximising transmission utilisation but supporting a functioning electricity market that benefits consumers while preserving security.

19. Importance for Energy Law

Interconnector congestion management demonstrates how modern energy law has evolved from national network regulation toward transnational infrastructure governance.

The legal problem is no longer simply:

Who owns the transmission line?

It is increasingly:

Who determines how much capacity is available, who receives it, under what methodology, and who is legally accountable for that decision?

This creates a complex governance structure involving:

EU legislation → ACER → national regulators → TSOs → market operators → electricity exchanges → market participants.

The courts increasingly play an additional role by determining the boundaries of institutional authority.

20. Conclusion

Interconnector congestion management governance is the institutional framework through which physical transmission constraints are translated into legally controlled market outcomes.

The modern EU approach combines:

coordinated capacity calculation;

bidding-zone design;

market coupling;

explicit and implicit allocation;

redispatching;

countertrading;

regional operational coordination;

congestion-income regulation;

regulatory supervision; and

judicial review.

The most important recent case law demonstrates that regional coordination is necessary where network effects cross borders, but at the same time ACER and other regulatory institutions must exercise their powers within the specific legal limits established by EU legislation. Polskie Sieci Elektroenergetyczne v ACER illustrates the first principle, while BNetzA and Germany v ACER illustrates the second. (curia)

Accordingly, effective congestion governance requires a combination of technical accuracy, market neutrality, regional cooperation, transparency, regulatory accountability and strict adherence to the governing legal framework.