Day-ahead power markets are set to be linked from Portugal to Finland as the European Union seeks to integrate electricity markets by the end of this year across the 28-nation bloc.
Spain and Portugal are due to today join the existing 15-country market coupling project, linked through an interconnector between Spain and France. Network operators and energy exchanges have held a single auction at noon Paris time since Feb. 4 to determine next-day power prices in the northwest of Europe.
Linking markets is part of the EU’s third package of legislation intended to remove national barriers to power and gas trading and reduce energy costs. Market coupling aims to smooth price differences between nations through better control of cross-border flows. Before coupling, traders selling power into another country had to buy cable capacity in advance, and then make a separate trade on another exchange, exposing themselves to two sets of price risk.
“This is the first time a market coupling arrangement has been geographically expanded,” Andrew Claxton, director of business development at APX Group Holding BV, said by e-mail. “Previously this has involved implementing a whole new solution. This shows that we have a robust underlying solution that can be extended across Europe.”
Day-ahead power market coupling links Austria, Belgium, Denmark, Estonia, France, Finland, Germany, Latvia, Lithuania, Luxembourg, Norway, the Netherlands, Poland, Portugal, Spain, Sweden and the U.K. excluding Northern Ireland, according to N2EX, a U.K. exchange.
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“Although the interconnection level between the Iberian Peninsula and Central West Europe, through the Pyrenees, is very limited, the new mechanism ensures a proper use,” Rafael Gomez-Elvira Gonzalez, a Madrid-based spokesman for Iberian exchanges OMIE, said by e-mail. “Market coupling optimizes the use of existing cross-border capacities.”
Day-ahead markets in Romania will be linked to Slovakia, Hungary and the Czech Republic through the price coupling mechanism on Nov. 11, Czech power market operator OTE AS said April 9.
Plans to link Swiss day-ahead markets with European countries have stalled after the bloc halted talks on the Alpine nation joining its energy market. The EU suspended talks after Swiss voters on Feb. 9 approved immigrant quotas, a move contrary to market-opening pacts with the EU going back to 2002.
Europe’s plans to link intraday power markets ground to a halt after power exchanges failed to agree on who would develop a platform. The European Commission said on Feb. 6 that it would propose legally binding obligations to ensure the intraday platform is developed. Exchanges from APX Group Holding BV to Epex Spot SE said on Feb. 10 they had reached an agreement and are working on an EU-wide platform.