NordREG launches report on measures to support the functioning of the Nordic financial electricity market

In light of the recent development with the Guideline on Forward Capacity Allocation (FCA) (see Background), the Nordic energy regulators are in the process of paving the way forward for the Nordic electricity market. The Nordic NRAs` starting point is to maintain and improve the current Nordic market design, relying on financial products for price hedging, while improving the market participant`s ability to hedge their price risk.

Hence, NordREG has commissioned a study on potential measures to consider in cases where insufficient hedging possibilities have been identified in certain bidding areas. The consultants were asked to describe and analyse different models for TSO involvement in the forward electricity market in order to facilitate improved hedging possibilities.

THEMA Consulting Group and Hagman Energy AB have now delivered their report “Measures to support the functioning of the Nordic financial electricity market” to NordREG. (Link to the report)

The Nordic NRAs will organise a hearing of the findings in the report in the beginning of 2016, where all market participants will be invited to give their written input. More information on this will follow. The goal is to have a close cooperation with market participants in the Nordic electricity market at an early stage, which will be a good starting point for the process required when the FCA GL enters into force.


On the 30th October 2015, the EU Member States gave a favourable opinion on the Draft Regulation establishing a Guideline on Forward Capacity Allocation (FCA). One of the main objectives with the FCA GL is to provide cross-border hedging opportunities for market participants. The reference tools for cross-border hedging are long-term transmission rights (LTTRs). However, the competent national regulatory authorities (NRAs) of a bidding zone border can issue coordinated decisions that TSOs shall not issue LTTRs. Such decisions shall be based on an assessment, which shall identify whether the electricity forward market provides sufficient hedging opportunities in the concerned bidding zones. In case the assessment shows insufficient hedging opportunities, the NRAs shall request to the TSOs to implement adequate measures; either to issue LTTRs on the concerned bidding zone border, or to make sure that other long-term cross-zonal hedging products are made available to support the functioning of wholesale electricity markets.


The study is carried out by THEMA Consulting Group and Hagman Energy AB, and the content does not necessarily reflect the views of the NRAs in NordREG.