How €718 Million in Electricity Bottleneck Revenues Funded Grid Stability Instead of Lowering Tariffs

How much money did grid operators collect from electricity congestion?

During the 2021 calendar year, the national transmission system operators collected a total aggregated congestion income of 718,730,781 € from cross-border congestion management .

Where is the collected congestion money actually being spent?

In 2021, the collected cross-border congestion revenues were allocated toward two primary regulatory objectives :

Guaranteeing the actual availability of allocated capacity: A total of 429,591,652 € was spent on this purpose (primarily by TenneT TSO GmbH with 216,874,267 € and Amprion GmbH with 191,184,918 €) .

Maintaining or increasing cross-zonal capacities: A total of 157,422,252 € was spent on optimizing existing interconnectors or covering network investment costs (primarily by TransnetBW GmbH with 86,232,348 € and 50Hertz Transmission GmbH with 57,914,521 €) .

Specifically, the transmission system operators (TSOs) spent these revenues on the following key grid infrastructure and interconnector projects :

SuedLink (TransnetBW): 52,946,369 €

HVDC SuedOstLink Wolmirstedt to area Isar (50Hertz): 52,067,377 €

Ultranet (TransnetBW): 19,501,619 €

Netzverstärkung Badische Rheinschiene (TransnetBW): 13,437,791 €

ALEGrO (Amprion): 11,179,190 €

Hansa PowerBridge I (50Hertz): 4,469,584 €

Niederrhein (DE) – Doetinchem (NL) (Amprion): 2,096,193 €

Kriegers Flak CGS (50Hertz): 1,377,560 €

Netzverstärkung Eichstetten – Bundesgrenze (TransnetBW): 346,569 €

In addition to these direct expenses, 45,556,879 € of Amprion’s collected revenues was placed on a separate internal account to be spent on these objectives in the future . No congestion revenues (0 €) were taken into account for network tariff calculations during this period . The remaining portion of the 2021 collected income is linked to an ongoing legal dispute involving Baltic Cable AB, which reported using its 2021 congestion revenues to fund its own operations, maintenance, depreciation, capital costs, and taxes .

Will these grid revenues help lower our electricity bills?

No, these congestion revenues did not directly lower consumer electricity bills in 2021 .

By law, congestion revenues can only be taken into account by regulatory authorities to lower network tariffs—the grid fees that make up part of consumer electricity bills—if priority objectives, such as guaranteeing grid reliability and upgrading cross-border connections, have been fully met first .

In 2021, all utilized congestion revenues were directed strictly toward these priority grid-stability and infrastructure projects, or placed into a separate internal account for future priority grid spending . As a result, 0 € of the collected congestion income was used to reduce network tariffs during this period .

How did electricity bottlenecks generate seven hundred million euros in one year?

Electricity bottlenecks (or capacity constraints) at Germany’s borders prevent electricity from flowing freely between neighbouring countries . To manage these bottlenecks, transmission system operators (TSOs) use market-based, transparent, and non-discriminatory procedures to allocate the limited cross-border capacity to electricity traders .

This capacity is allocated in two ways:

Explicit auctions: Transmission capacity is auctioned beforehand and sold separately from the actual electricity trade .

Implicit auctions (Market Coupling): Both the electricity commodity and the transmission capacity are allocated jointly .

Through this system, congestion income is generated by the TSOs from the price spreads (the differences in electricity prices) that remain between the countries after the markets are coupled, as well as from the remuneration of long-term transmission rights (LTTRs) . Because price differences exist between countries due to these physical capacity limits, these auctions and price spreads combined to generate a total aggregated congestion income of 718,730,781 € in 2021 .

Why are countries fighting over profits from a single undersea power cable?

The “undersea power cable” refers to the Baltic Cable, an electricity interconnector connecting Germany and Sweden . The dispute centers on how its operator, Baltic Cable AB, is permitted to spend the congestion revenues generated from auctioning the cable’s capacity .

The conflict began when the Swedish regulatory authority ordered the operator to transfer a portion of its historical congestion profits into a separate account, arguing that the funds were not being used in accordance with European electricity regulations . Because Baltic Cable AB merely operates a single cross-border cable, a key legal question arose: can a pure interconnector operator use congestion revenues to cover its own routine operating and maintenance costs, or must those revenues be treated strictly as capital investments to expand capacity ?

The European Court of Justice clarified that while routine operating and maintenance costs cannot be classified as capacity-expanding grid investments, regulators must still authorize the operator to use a portion of its congestion revenues to cover these costs and make an appropriate profit so it can operate under financially viable conditions . Currently, regulatory authorities like Germany’s Federal Network Agency are reviewing the operator’s actual use of these revenues to ensure they comply with these legal standards .

How do electricity congestion profits fund massive national power grid projects?

Congestion profits are generated by transmission system operators (TSOs) from the price differences that remain between neighboring countries due to physical capacity constraints at national borders . Under European Union regulations, these collected revenues must be allocated to priority objectives, which include maintaining or increasing cross-border capacity by covering costs from network investments that reduce grid bottlenecks . To prove compliance, TSOs are required to submit lists of specific grid projects to which congestion revenues have been allocated to demonstrate their relevance to these priority goals .

Through this system, TSOs directly reimburse the capital expenditures of major transmission infrastructure projects from their collected congestion profits . In 2021, this funding mechanism supported several massive national projects . For instance, SuedLink received 52,946,369 € to cover its development costs . Another major project, the HVDC SuedOstLink connecting Wolmirstedt to the Isar area, had 52,067,377 € of its project expenditures recovered directly from the 2021 congestion income . Other critical grid reinforcements, such as Ultranet (19,501,619 €) and the Badische Rheinschiene line (13,437,791 €), also relied directly on these profits to fund their ongoing development .

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Source institutions：Bundesnetzagentur

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