13 Mar 2019
How Nordic markets could reach their full potential
The Nordic market design has been the blueprint for European markets, creating the basis of the pan-European electricity trading arrangements.
But recently, driven by growth in variable renewables, other European markets have moved the game on.
The Nordic (and specifically Norwegian) markets do not face such strong pressure to adapt, because of the inherent flexibility of the hydro fleet.
A recently published report from Thema Consulting, commissioned by the Norwegian regulator, NVE, assesses the consequences for the Nordic market if a larger share of the trade took place closer to the operating hours, and concludes that there is “no convincing rationale for reserving cross-zonal capacity for intraday trade.”
Pöyry, however, has reworked the case presented in Thema’s report and comes to the opposite conclusion: that the relative lack of attention to intraday timeframes means that the Nordic electricity market is unable to realise the full economic potential of the flexible capacity.
The first part of Pöyry’s paper presents the need for capacity allocation between timeframes, before then reviewing the potential mechanisms that can support the allocation of capacity across timeframes and the constraining factors to be considered for the Nordic market. In Pöyry’s view, valuing flexibility is at the heart of a successful energy transition.
Market design is a topic that always benefits from the open debate of ideas and concepts: join the discussion by downloading the full Pöyry paper now and let us know what you think using the contact details below.
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