Energy price coupling launched across north western Europe

Day-ahead power prices covering three quarters of Europe’s power consumption will from today be calculated in the same way and at the same time to up the opportunities for cheap electricity in one country to meets demand and reduces prices in another.

The launch today of “price coupling” in the North Western Europe (NWE) region completes a project undertaken by four power exchanges and 13 transmission system operators in the region. The power industry organisations behind it forecast that it will improve market liquidity, efficiency of access to transmission and establish transparent, market-based prices. Co-chair of the price coupling project Bente Hagem said: “NWE will lead to considerable gains in social welfare.”

At the same time one of the exchanges behind the NWE price-coupling project, Nord Pool Spot, went live with its GB Virtual Hub that will enable Britain to participate in NWE price coupling. The hub will enable more than one power exchange to operate in Britain so that liquidity will be pooled, and all exchanges will share identical, hourly settlement prices.

Chief executive of Nord Pool Spot, Mikael Lundin, said the GB virtual hub along with price coupling will improve the efficiency and transparency of cross border electricity trading. “The exemplary positive and valuable cooperation displayed by the power exchanges, TSOs and regulators has taken us one big step closer to achieving a common European power market,” he said.

While NWE is the first region to implement the common price calculation system known as Price Coupling of Regions (PCR) the South Western Europe (SWE) region will also implement PCR and be fully synchronised with NWE “in the near future”. Combining NWE and SWE under synchronised PCR will cover some 2,000 TWh a year –75 per cent of European power consumption.