In the context of the European regulation on the internal market for electricity, part of the Clean Energy Package, the European TSOs will conduct a common study into alternative bidding zone configurations, the so-called bidding zone review. Fortum welcomes the Nordic bidding zone review, which has possibilities to further increase the Nordic power market efficiency.
Fortum does not support the TSOs’ narrow proposal for alternative bidding zone configurations. In Fortum’s view, the primary new configurations should be based on less bidding zones by merging some of the current bidding zones. This would support efficiency in both wholesale and retail power markets, as well as the targeted stability and robustness of the bidding zones. Liquid and well-functioning financial markets and adequate hedging possibilities are also an important factor, which should not be forgotten when evaluating the different bidding zone configurations.
Fortum proposes that the Nordic TSOs present the review work status and consult market stakeholders on their views through stakeholder workshops also during the bidding zone review. The bidding zone review should include an adequate range of future configurations and take into account also other possibilities for market improvements.
Key Fortum views on the Bidding zone review:
- Fortum supports regularly reviewing the Nordic bidding zones in order to increase market efficiency
- Fortum expects bidding zones to be large enough in order to enable liquid financial forward trading and to include sufficient balancing resources to operate
- Fortum considers that new configurations should be based on less bidding zones by merging some of the current bidding zones
- Fortum supports the target to keep Finland as a single bidding zone
- Fortum supports the merger of SE3 and SE4 to one price zone, but opposes the establishment of a separate Stockholm region price area, as it is too small and unbalanced for underlying energy markets to operate
- Fortum is disappointed that a merged to SE1 and SE2 is not proposed in this review
- Fortum does not support splitting of the Norwegian bidding zone NO4
- Fortum considers that the bidding zone review should study a larger number of alternative configurations and possibilities to reduce the amount of bidding zones
- Bidding zone review should also duly take into account the impacts of the new bidding zone configurations on the financial market and hedging possibilities
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Fortum's view on the Nordic TSOs' proposal for Nordic bidding zone review