New electricity market rules allow efficient EU-wide electricity trading

New electricity market rules allow efficient EU-wide electricity trading

23 July 2015

The European Commission has adopted new electricity market rules which will bring the goal of a well-integrated EU internal energy market a step closer.

The new Regulation creates a comprehensive legal framework for electricity trading in Europe and makes so-called 'market coupling' legally binding across the EU. Market coupling essentially brings all bids and offers from different national power exchanges for cross-border trading into one 'basket' and allows matching them in an optimal manner across borders. Market coupling is estimated to save customers from €2.5 to 4.0 billion a year .

The Regulation is part of the Commission's project to create an Energy Union with a truly integrated electricity market. One pillar of this project is the initiative to remove barriers to electricity trade and coordinated grid operation through a series of new EU laws (known as 'network codes and guidelines'). More cross-border trade will increase competition in electricity markets, and more coordinated system operation will save unnecessary costs resulting from the current fragmented grid operation.

The Regulation on market coupling adopted today (official title: 'Regulation establishing a Guideline on Capacity Allocation and Congestion Management') will also help increase trading of electricity over shorter time horizons. This will allow for a more efficient integration of renewables into the grid as suppliers and traders can take into account better forecasts on how much solar or wind energy will be produced. Finally, the new rules establish a new decision-making procedure which enables effective regional cooperation amongst grid operators, power exchanges and regulators.

The new Regulation will be published in the EU’s Official Journal on 25th July 2015 and enter into force on 14th August 2015.

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