Nordic aFRR capacity market needs to await results of flow-based external parallel run

Nordic aFRR capacity market needs to await results of flow-based external parallel run

The Nordic TSOs have received guidance from the Nordic NRAs on go live of the Nordic aFRR capacity market, based on the ACER decision dated August 5 2020. The guidance means that the TSOs need to wait for the results of the "external parallel run" for the flow-based capacity calculation method before moving forward with go live for the Nordic market.

After the ACER decision on a Nordic aFRR capacity market, the Nordic TSOs have been in dialogue with the Nordic NRAs about the planning of the go live of the Nordic market. As a pre-requisite for the aFRR capacity market go live, the Nordic NRAs support that cross-zonal transmission capacity does not need to be allocated according to the method stated in the CACM regulation. However, the Nordic NRAs advise the TSOs to ensure adequate quality in the future capacity calculation method during the "external parallel run" before going live with the Nordic common aFRR capacity market.

In practice, this means a go live in Q4'21 at the earliest, instead of Q2'21 as previously communicated. This also means that the go live depends on the implementation of the flow-based capacity calculation method. Consequently, a delay in this implementation will result in a delay of the go live of the aFRR capacity market.

The Nordic TSOs will now continue to finalise the development of the Nordic common IT platform. In parallel, the TSOs will analyse the potential of running current national markets on the platform as well. That would be another step towards introducing new market design elements.

The Nordic TSOs will continue the close dialogue with the NRAs regarding the continued process of the market go live and will keep stakeholders informed about the results.

The need for aFRR resources is increasing, and they are also the backbone of the new balancing model being developed by the Nordic TSOs. From a socio-economic perspective, it is essential to provide all bidding zones with access to this reserve; Otherwise, it will be very costly to introduce ACE-based balancing and 15-minute market resolution, which are required by European legislation and prerequisites for joining the European platforms.

The Nordic aFRR capacity market is a transparent and socio-economically efficient market solution supporting a ramp up of the much needed reserves within the Nordic synchronous area. The Nordic TSOs are highly committed to ensuring the implementation of the common Nordic aFRR capacity market as soon as possible.