Plan to Link Northwest Europe Power Markets Delayed by 2 Months

A project to link power markets that account for 75 percent of electricity supply in Europe has been pushed back two months to Feb. 4, a second delay that puts the plan more than a year behind schedule.

The market coupling initiative, which intends to create a single day-ahead electricity price in 15 countries ranging from the U.K. to the Baltic states had been scheduled to start on Nov. 26, according to a statement on the website of Oslo-based exchange operator Nord Pool Spot AS. The November deadline was a delay from the originally planned start date of December 2012.

“Parties involved agree that having final versions of systems perform in a stable way for a certain time is an absolute prerequisite for go-live,” according to the statement. “Time left to Nov. 26 is therefore too short,” to allow the minimum four weeks of operation before the Christmas holidays, it said.

The EU wants a single electricity market across 28 countries by the end of 2014, allowing power to flow freely to markets where prices are highest. Linking northern Europe would be the first step toward achieving this goal. It will later be linked to the southwest region .

Market coupling allows the calculation of prices, net trading positions and power flows on interconnector cables between market areas simultaneously, according to a document on Nord Pool’s website. It requires cooperation from 13 electricity network operators and four power exchanges.

Having a single market for power will reduce national barriers and cut consumer costs, according to the European Commission.

Delay Warning

The initiative could be pushed back because of delays in the U.K., Amsterdam-based exchange APX Group, which runs one of the country’s two power auctions, told journalists at a briefing in London on Oct. 31.

To complete market coupling in the U.K., APX Group and N2EX, which runs the country’s second exchange, must set up a virtual trading hub and harmonize their daily auctions to create a single price, APX said. The day-ahead auction would then be linked to the rest of Europe.

Not enough integration and testing has been completed to meet the Nov. 26 deadline, said APX spokeswoman Sanna Maaria Matilla by e-mail. Reliability and stability of the project are more important than “holding a deadline at any cost,” she said.

APX is responsible for making sure that the 1,000-megawatt Netherlands-U.K. power connection is capable of participating in market coupling, while N2EX has responsibility for the 2,000-megawatt cable between France and the U.K., according to Nord Pool.

“The virtual hub remains ready to to go live alongside the NWE project,” Stuart Disbrey, spokesman for N2EX, which is jointly owned by Nord Pool Spot and Nasdaq OMX Group Inc., said by phone from London.

The February start date will be confirmed before Christmas, said the statement on Nord Pool’s website.

To contact the reporter on this story: Rachel Morison in London at rmorison@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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