Flow-based coupling improves Nordic region’s capacity 

Norway: Siltanews – News Desk
The recent introduction of flow-based electricity market coupling in the Nordic region has increased grid utilization despite creating some price fragmentation, Norway’s TSO and market experts said on Tuesday. “With flow-based market coupling we are able to give much more capacity to the market,” Martha Oberg, head of market design and system utilization of Norwegian TSO Statnett, told a Montel Green Week webinar.

She said the increased use of digital and automated solutions allowed TSOs to feed price algorithms with more data about the grid, capacity at critical network points and how electricity is distributed. “You may have been surprised to see how manual many of the TSO procedures have been,” she said, referring to the previous methodology.

Norway, Sweden, Denmark and Finland introduced flow-based market coupling in their spot markets on 29 October, mirroring what Germany and some other European countries did nine years ago, in a bid to make more efficient use of existing grid capacity to better accommodate a rising share of intermittent renewable in the system.

Nevertheless, the flow-based coupling has resulted in an increase in price fragmentation within the Nordic region, said Jakob Bendixen, partner at consultancy Our New Energy. “Flows between the Norwegian and Swedish areas, particularly in the north, have changed a lot after we moved to flow-based [coupling]. While we used to see more or less the same prices in Sweden’s SE1 and SE2 bidding zone previously, they now tend to differ a lot,” he said.

Priyanka Shinde, Nordic market expert at Montel Analytics, said the system had also given counterintuitive flows, which sees electricity in periods flowing from a high price area to a low price area, which was “unusual” for the Nordic market prior to the launch.

One such example came on 6 November, when central Norway’s NO3 zone was a net importer despite having the lowest prices in the Nordic region.