emcc: The European Market

The European Market

The energy market is one of the last markets in the EU facing cross-border integration - most industries are already competing in the EU Single Market. The proposal of the European Commission to create a common European energy policy was an important step towards harmonising national markets into working regional markets and finally a pan-European market.

A Common European Energy Policy

According to the Electricity Directive of 2003, the key European legislation on establishing an internal market for electricity, every consumer in Europe should be free to purchase electricity from the supplier of his choice. Suppliers, on the other hand, should have access to all European customers. However, many of the national markets are still highly concentrated, lacking cross-border integration and suffering from weak competition. There is also insufficient price transparency, which benefits neither customers nor energy companies.

Creating Regional Markets

In a strategy paper in 2005 the European Commission for the first time mentioned regional markets as a step towards a pan-European market. On 10 January 2007, the European Commission published a package aiming at a common European energy policy. In addition to an overall target on reduction of CO2 emissions, increased energy efficiency and increased use of renewable energy, the Commission stressed that further steps need to be taken towards a competitive and open European electricity market.

Since then, regional initiatives have been started by the European regulators in ERGEG (a European body of independent regulators acting as an advisory group to the Commission). With initiatives such as EMCC or the Central Western European (CWE) projec, the strategy is beginning to bear fruit. EMCC started Nordic-German market coupling  on 9 November 2009.

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Inter-Regional Tight Volume Coupling

In January 2010, transmission system operators and power exchanges from the Central Western European (CWE) and Nordic countries and EMCC initiated the integration of the CWE and Nordic markets. EMCC was asked to develop joint business processes and to set up the market coupling system to integrate the two largest regional electricity markets (REM) with an power production of 1,800 TWh in 2009. Interim Tight Volume Coupling (ITVC) is based on the previous Nordic-German tight volume system operated by EMCC. It was developed in two steps. The first step without NorNed cable was launched on 9 November 2010.