Day-ahead Wholesale Electricity Markets in North-Western Europe Coupled and South-Western Europe Synchronised

Power exchanges and transmission grid operators (TSOs) from 14 EU countries and Norway constituting the North-Western Europe (NWE) region successfully launched NWE day-ahead price coupling yesterday, using a single day-ahead power price calculation (Price Coupling of Regions (PCR)). The same solution is also used in the South-Western Europe region (SWE), comprising France, Spain and Portugal, in a common synchronised mode.

PCR provides a single algorithm and harmonised operational procedures for efficient price calculation and use of European cross-border transmission capacity.

“Henceforward Power Exchanges from countries which account for 75% (more than 2000 TWh) of European electric consumption, for the first time, calculate electricity prices at the same time and in the same way”, a joint press release informs. It also points out that although SWE is synchronised with NWE with both using PCR, for the time being the daily explicit auction at the France-Spain border will be maintained as it is, with the intention to move to implicit allocation in the near future.

“The start of the NWE market coupling proves that the Internal Energy Market 2014 is not just lip service. Fragmented European energy markets will soon be history, which is certainly good news for European customers”, EU Energy Commissioner Oettinger said. It was in the process of preparing an EU Regulation that will make market coupling binding in the entire EU, the Commission further pointed out.

German electricity customers, who have experienced strong electricity price increases over the past years, would certainly welcome if they benefitted “in time”, as the joint press release says, ” from the more efficient use of the power system in the region, resulting from a more closely connected market.” This is even more true as Germany decided in 2011 to phase-out nuclear power by 2022 and replace it to a large degree by variable renewable power, for which consumers pay a steadily increasing renewable surcharge (EEG surcharge). The new German government just announced to raise the legally binding corridors for the expansion of renewable energy to 40% to 45% by 2025 and 55% to 60% by 2035. By 2050 the share of renewables in the energy mix shall amount to at least 80% (cf. Section 1 EEG). At the same time the government plans to cut EEG-related costs, reforming the EEG (for more information, please click here).

Sources: Epex Spot press release on NWE coupling, press release on SWE synchronised operations; European Commission

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