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Nordic market design forum - enhancing the world's first regional electricity market

Electricity markets worldwide are changing rapidly in the face of increasing renewable generation, technological developments that empower the customer, digitalisation, as well as new technologies such as storage. The cross-border Nordic electricity market, which is the world's first regional market and which served as the inspiration for the European 'Target Model', is being affected by these trends. The Nordic surplus of flexible generation capacity is expected to continue, while the need for flexibility in neighbouring countries will increase. How can the flexible resources of the Nordic region reach their full market potential? How could the Nordic market design evolve to meet the new challenges?

A new report from Pöyry presents the results of a 1.5 year project with collaboration from 10 key Nordic energy organisations - Danish Energy Association, DONG Energy, Energinet, Elering, Fingrid, Finnish Energy, Fortum, Statkraft, Energi Norge and Vattenfall - and sets out the direction for changes to the Nordic market design.

The Nordic market design vision described in the report envisages a larger role for the market across different trading timeframes. Our vision would give the Nordics an opportunity to be a first mover in providing a high level of security of supply in a market-based and cost-efficient way, while incentivising innovation and investment where needed. The proposals would deliver an efficient and competitive Nordic electricity market, minimising the need for political and regulatory interference.

The core of the proposals is to strengthen the 'energy only' market design, which should:
• support system operation;
• empower consumers;
• send economic and robust price signals for efficient resource allocation; and
• support innovation and the incorporation of new technologies into the market.

"Nordic market design needs Nordic solutions and concepts at a Nordic level" says Project Director Stephen Woodhouse from Pöyry. "Our work, developed with a wide range of Nordic stakeholders, fills an important gap. The strong debate between participants throughout the project underlines the need for a continuous regional dialogue on these topics. The report provides an important and timely contribution to the regional debate and we look forward to seeing the concepts being taken forward."

The changes to Nordic market design could be implemented by 2020 with a visible impact by 2025.

The following areas are covered in the report:
• Real time price signals that support system operation and market functioning;
• An enhanced intraday market better equipped to facilitate the market functioning;
• System services that are adequately rewarded and similarly compensated across the Nordic market;
• A more Nordic market design for strategic reserve that does not distort market price signals;
• A roadmap for implementation of the next steps of the market design proposals; and
• The creation of an enduring market design forum to monitor progress and drive the change.



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