French, German, Belgian, Dutch and Luxembourg electricity markets are set to be integrated into a single regional area by 1 January 2009. A Memorandum of Understanding (MoU) agreeing on the implementation of a coupled market was signed between governments, regulators, power exchanges, transmission-system operators and the electricity associations of the participating countries on 6 June 2007.
A 'tri-market coupling' between Belgium, France and Netherlands was already established in November 2006, and now Luxembourg and Germany have decided to join the initiative.
According to north-west European Market Parties Platform (NWE MPP) of electricity associations: "Market coupling of short-term electricity markets leads to a more efficient use of interconnection capacities, providing more opportunities for energy suppliers to buy and sell power and to optimise their portfolios." Associations also expect that more market integration will to lead to enhanced competition - bringing benefits to consumers in the whole region.
Energy Commissioner Andris Piebalgs welcomed the move as "a positive step towards a single European energy market", and agreed that it will bring lower prices for consumers, increase security of supply and attract investment in new-generation capacity and transmission infrastructure.
Eurelectric, the European electricity industry association, said it welcomed the initiative as "an important step towards establishing an integrated electricity market in this region and a major step on the way to a competitive internal European electricity market."
"It also demonstrates that moves towards market integration can be effectively achieved when the political will is there."
NWE MPP highlights the introduction of a common auction office and the harmonisation of trading rules as a key step in creating a coupled market. The parties involved in the MoU will now further develop the concept of, for example, the governance structure of the market coupling and will discuss measures to increase security of supply in the region.
