title: "Forward Capacity Allocation Regulation (FCA) - EU 2016/1719" type: wiki source: eur-2016-1719-fca.md updated: 2026-04-10 tags: [forward-market, ltr, interconnector, eu-retained, revoked-gb, cross-zonal]

Forward Capacity Allocation (FCA) Regulation

Commission Regulation (EU) 2016/1719 | Adopted 26 September 2016 | Revoked in GB 31 December 2020

Primary source: eur-2016-1719-fca.md

What it is

FCA 2016/1719 is the EU network code that governs forward capacity allocation: the process by which cross-border electricity transmission capacity is auctioned to traders before the day-ahead market. It was one of a package of EU network codes made under the 2009 Electricity Regulation, alongside CACM (day-ahead and intraday allocation) and EBGL (balancing). It has 64 Articles across 4 Titles.

The FCA Regulation sets rules for:

• how TSOs calculate the cross-border capacity available for forward (annual and monthly) auctions
• what types of transmission rights can be issued and how they work
• how a single pan-European auction platform must operate
• how rights can be returned, transferred, and compensated if curtailed

Long-term transmission rights (LTRs)

LTRs are instruments that give holders a claim on cross-border transmission capacity for a future delivery period, auctioned annually or monthly ahead of the day-ahead market. They exist to allow generators and traders to hedge their price exposure on cross-border flows: a generator in a low-price zone selling into a high-price zone can lock in the price difference by holding an LTR on that border.

Three product types exist:

Physical transmission rights (PTRs): The holder can nominate an actual electricity schedule across the border. If the holder does not nominate by the deadline, UIOSI applies - the capacity is automatically released to the day-ahead market and the holder receives the day-ahead market spread as compensation (use it or sell it).

FTR-options: A purely financial instrument. The holder receives the difference between the two bidding zone day-ahead prices if that difference is positive in the direction of the right. If the spread is negative, the holder pays nothing - it is an option, not an obligation.

FTR-obligations: The holder receives a positive spread but must also pay a negative spread. The right is financially symmetric, creating both an asset and a liability depending on market outcomes.

PTRs and FTR-obligations/options cannot be issued in parallel on the same border - each border chooses one product type framework.

Single allocation platform (JAO)

The FCA Regulation required all EU TSOs to establish a single allocation platform (SAP) for all LTR auctions. In practice, the EU SAP became JAO (Joint Allocation Office), a company established by European TSOs and based in Luxembourg. All forward capacity auctions on EU interconnectors run through JAO. JAO publishes auction specifications, runs the auctions, handles settlement, and publishes results.

Key features of the SAP framework: - Market participants must register once with JAO to access all interconnector auctions - Auctions use marginal pricing: all successful bidders pay the same clearing price - Results must be published publicly; at least 5 years of auction history must be maintained - Fallback procedures (default: postponement) apply if JAO cannot deliver on time

Revocation in GB

FCA 2016/1719 was revoked in GB with effect from 31 December 2020 by:

S.I. 2019/532 - The Electricity Network Codes and Guidelines (Markets and Trading) (Amendment) (EU Exit) Regulations 2019, regulation 5(1)(b), as amended by S.I. 2020/1016.

The regulation has no operative force in GB. The text on legislation.gov.uk shows all Article content as redacted (revoked).

How GB interconnector forward rights are allocated now

After revocation, there is no single unified framework governing GB interconnector forward capacity. Arrangements differ by interconnector and have evolved since 2021:

JAO bilateral participation: Some GB interconnector operators continue to participate in JAO auctions under bilateral commercial/operational agreements between NESO and their EU counterparts. This is not underpinned by FCA 2016/1719 but by the terms of the individual interconnector operation agreements and the GB-EU Trade and Cooperation Agreement (TCA) electricity provisions.

Explicit day-ahead auctions: GB left the SDAC (Single Day-Ahead Coupling) implicit auction algorithm at IP completion day. Day-ahead cross-border capacity between GB and France, Belgium, Netherlands, Denmark, and Norway is now allocated through explicit auctions - buyers bid for capacity in MW, then separately trade the energy. This is less efficient than implicit allocation because energy and capacity are not optimised together.

TCA electricity provisions: The GB-EU TCA (Title VIII) provides a framework for electricity trading cooperation. It does not replicate the EU internal market rules but requires parties to ensure efficient allocation of cross-border capacity. The Joint Specialised Committee on Energy (one of the TCA governance bodies) oversees implementation.

Per-interconnector arrangements: Each interconnector has specific capacity allocation rules agreed between the relevant operators (e.g. National Grid ESO/NESO, RTE, Elia, TenneT, Statnett) and regulators. These are less harmonised than the pre-Brexit SAP framework.

The practical result is that GB traders have more fragmented and less liquid forward hedging options on interconnectors than EU-based traders using JAO, and the forward capacity product types available vary by interconnector.

Cross-references in the knowledge base

• CACM 2015/1222: the day-ahead and intraday parallel - FCA references CACM over 25 times
• instruments.md row 91: FCA registration and status