North-Western European Power Markets Successfully Coupled - A Landmark In The Integration Of The European Power Market

In a landmark move for the future of Europe’s power markets, the four Power Exchanges and 13 Transmission System Operators (TSOs) in the North-Western Europe (NWE) day-ahead price coupling project have today successfully launched NWE Price Coupling. For the first time, the NWE region, stretching from France to Finland, operates under a common day-ahead power price calculation using the Price Coupling of Regions (PCR) solution. The same solution is also used at the same time in the SWE region in a common synchronised mode.

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 revolutionary first step towards a common European power market.

In time, Europe’s power consumers will benefit from the more efficient use of the power system in the region, resulting from a more closely connected market.

While NWE is the first region to implement the PCR solution, South Western Europe (SWE) is synchronised with the new system from go-live, 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.

”We are delighted to provide this core milestone of the future pan-European power market”, says Jean-François Conil-Lacoste, Co-Chair of the NWE project. “NWE will lead to considerable gains in social welfare”, adds Co-Chair Bente Hagem.

Price coupling allows cross-border transmission capacity to be used directly by Power Exchanges’ day-ahead markets – a mechanism known as implicit allocation. The PCR solution has been developed by European Power Exchanges to provide a single algorithm and harmonised operational procedures for efficient price calculation and use of European cross-border transmission capacity, calculated and offered to the market in a coordinated way by TSOs.

All interconnectors within and between the following NWE countries will now be optimally utilised: Belgium, Denmark, Estonia, Finland, France, Germany/Austria, Great Britain, Latvia, Lithuania, Luxembourg, the Netherlands, Norway, Poland (via the SwePol Link), and Sweden. The SWE project covers France, Portugal and Spain.