Preserve current similarities between Nordic retail markets and explore if data sharing on a Nordic level could promote new business models related to flexibility services. Those are two of recommendations towards regulators in a study performed by Implement Consulting Group on behalf of the Nordic Energy Regulators, NordREG.
The consultant has investigated if a closer integration between Nordic data hubs might deliver benefits for end customers in Denmark, Finland, Norway and Sweden.
In the consultant’s report, Nordic countries are advised to explore the potential related to new business models such as flexibility services, smart services, sector coupling and similar. As opposed to already established market rules, the rules for implementing markets for micro-flexibility, local distribution tariffs, prosumer incentives, etc. are still being shaped. This creates a window of opportunity for promoting a certain level of Nordic harmonisation and thus fostering a common market for these.
The main challenge is that the four* data hubs have not been designed to be interoperable with each other. The consultant has analysed costs and benefits with different options of interoperability, ranging from a low investment option where aggregated meter data is shared on a common platform to a full market harmonisation which will have a fundamental impact on processes and IT systems for all market participants.
Analysing the current market situation, the consultant found that even though some of the options for interoperability create cost savings in certain parts of the value chain, all solutions have net costs. The main reason for this is that since each of the current Nordic Retail markets already are very competitive, there is no competition issue to solve and hence no potential benefit from interoperability.
However, in the longer perspective, the consultant believes that new business models may benefit from interoperability. For market actors that develop entirely new value-added services, interoperability might allow easier access to a larger market and make the investment in such product innovation more attractive.
The consultant recommends that the Nordic countries preserve the potential related to existing market similarities and promote market harmonization when implementing new market rules. This is particularly relevant for the implementation of the Clean Energy Package which will open up new markets.
Also, assuming that the new business models require data access but not use of data to support automated transactions, the consultant concludes that sharing aggregated data from the national data hubs may be a sufficient interoperability measure to promote new business models. This is the least costly option assessed in the report. It has no cost for suppliers that decide not to apply it and is recommended to be investigated further.
* Those already existing in Denmark and Norway, and the ones planned in Finland and Sweden.
For more information, please contact:
Chair of NordREG Retail Market Working Group
Swedish Energy Markets Inspectorate
Nikolai Aleksander Grønland
The Norwegian Energy Regulatory Authority
Danish Utility Regulator