Nord Pool Spot has been chosen to develop and operate a ‘virtual hub’ to facilitate the full participation of the GB electricity market in the North West European (NWE) market coupling project.
Nord Pool Spot was selected following a competitive tendering exercise run by National Grid Interconnectors Ltd, the GB operator of the electricity interconnector to France (IFA).
The virtual hub will facilitate the pooling of GB liquidity and the formation of a common reference price for electricity across all participating GB power exchanges by the end of 2012, in line with the objectives of the NWE project.
Welcoming the new agreement Mikael Lundin, CEO of Nord Pool Spot, said: “Nord Pool Spot is closely involved in the development of the Price Coupling of Regions (PCR) project and the NWE initiative.
“Our experience in market coupling has seen us already successfully integrating the Nordic countries and Estonia, working with the Polish power exchange to establish price coupling between the Nordic markets and Poland, as well as developing the N2EX market, operated jointly with Nasdaq OMX Commodities, in the UK.”
Under the NWE umbrella Nord Pool Spot, together with other GB and European energy exchanges, will deliver market coupling and capacity allocation services to Great Britain, the Central Western Europe region and the Nordic areas providing a common algorithm covering all requirements from the relevant transmission system operators.
Mikael Lundin continued: “We are looking forward to working with National Grid Interconnectors to help meet the challenges ahead of a fast changing market.”
In contrast to the other countries involved in the NWE market coupling project, the GB market allows for multiple power exchanges and interconnector operators to participate in the market.
The purpose of the GB hub will be to facilitate open access and participation of all these parties and to ensure that there is a single electricity market price for GB, rather than potentially having differing prices on each GB exchange.
The hub will form a key part of the NWE market coupling project and will ensure that GB liquidity will be pooled, along with the liquidity of the other exchanges in the NWE region. This will allow demand to be matched with the cheapest generation in the region, subject to there being sufficient available interconnector capacity
GB traders will continue to have their usual contractual relationship with their power exchange, Nord Pool Spot’s role as hub operator will be to seamlessly facilitate the inter-exchange transactions and arrange for interconnector flows with the interconnector operators.
Alison Kay, Director of National Grid Interconnectors Ltd, commented: “We are delighted to have chosen Nord Pool Spot as our partner to develop and operate the GB virtual hub.
“The appointment of the hub operator and the development of the hub arrangements during 2012 are important steps towards the goal of a single European market by 2014. We are proud to have taken a leading role in establishing the hub arrangements for the GB market and look forward to the widest possible support and participation of other GB exchanges and interconnector operators going forward.
“We believe that the ‘virtual hub’ will lead to more efficient allocation of interconnector capacity and through its role in pooling liquidity promote a more robust GB electricity reference price for market coupling.”
About Nord Pool Spot
Nord Pool Spot operates the leading power markets in Europe, offering both day-ahead and intraday power trading markets to its customers. 350 companies from 20 countries trade on its markets. In 2011 the group had a total turnover of 316 TWh. In the UK Nord Pool Spot runs the power market offering N2EX together with NASDAQ OMX Commodities.
Lysaker, 13 April 2012
For more information, please contact:
Stuart Disbrey, Communications Manager UK, +44 7887 409 044