Because of economic efficiency and public acceptability of high-voltage power lines, it is not feasible to install sufficient cross-border capacity. Consequently in many cases, the transport capacity demanded by market participants exceeds the available capacity – in this context, it is called a cross-border congestion. European Commission and Parliament Regulation (EC) Number 714/2009 stipulates that, at borders on which such a cross-border congestion has been declared, the cross-border transport capacities are to be made accessible to the market participants through market-based procedures. Products available for the market distinguish between yearly-, monthly-, daily- and intraday time domain.
The allocation of cross-border transport capacities, two forms of awarding - explicit and implicit - are distinguished between in principle.
In explicit allocation, the available cross-border transport capacities and the traded energy are dealt with separately from one another. The purchase or sale of energy takes place either in a trade venue (for instance, an electricity power exchange) or OTC (Over the Counter, bilateral), while the auctioning off of cross-border transport capacities is carried out by auctionhouses. For those Austrian borders that are explicitly administered, the second of these processes takes place through the Joint Allocation Office (JAO) that replaced former Central Allocation Office Freising (CAO) and Capacity Allocating Service Company (CASC).
With deals for the following day (day-ahead) and within a single day (intraday timescale), implicit allocation represents the target model based on CACM (Capacity Allocation and Congestion Management, (EU) 2015/1222) guideline. In this case, the available cross-border transport capacities and the energy are dealt with together (and so simultaneously) in order to avoid potential inefficiencies. For the day-ahead timescale, implicit allocation is also referred to under the term "market coupling." On the Italian (Austria-Italy) and Slovenian (Austria-Slovenia) and since October 2018 on the German (Austria-Germany) border, Day Ahead Market Coupling (implicit allocation) has already been successfully implemented.
The trading of long-term products (yearly, monthly) is based on the regulations of FCA (Forward Capacity Allocation, (EU) 2016/1719) guideline which became valid in autumn 2016. This kind of forward market shall enable market participants to hedge against the volatility of short term price of the concerned bidding zone.
The following table represents the various forms in which the allocation of cross-border transport capacities on specific timescales is organised: