Europe’s single day-ahead market has an automatic price limit adjustment mechanism in case of high prices. The rationale behind this mechanism was following price spikes or in case of scarcity to allow consumers and market participants to gradually and better adapt to the market situation.
Ahead of the expected repeated high prices on the electricity markets over the upcoming season, ACER urges a review of the methodology governing the automatic increase of price limit in order to limit the frequency of those increases and provide a more stable framework for consumers and market participants in this difficult context.
To change the methodology, requires the Nominated Electricity Market Operators (NEMOs) to first propose an amendment to the methodology, which ACER can subsequently review and approve. ACER formally has 6 months to reach a decision but aims at conducting the process in a significantly more rapid manner.
ACER therefore urges NEMOs to submit amendments to the methodology.
In the second half of September (and conditional on the NEMOs’ submission), ACER intends to run an expeditious public consultation on the proposed amendments of the NEMOs.
Price spikes can occur more frequently if not enough cross-border interconnector capacity is made available for trade and/or demand response is not being brought to the market. In some instances, this may even endanger security of supply.
Therefore, and irrespective of the ongoing review of the mechanism, ACER calls on Transmission System Operators (TSOs) to make sufficient cross-zonal capacity available for trade and market participants to bring significant demand response to the market.
