CACM 2.0

CACM 2.0

The review of the Guideline on Capacity Calculation and Congestion Management, a document that is considered as the backbone of European Market Coupling, will decide on the future setup of the European power market.

EPEX SPOT, along with other Nominated Electricity Market Operators (NEMOs) and Transmission System Operators (TSOs) have submitted several proposals to make sure that the power market will remain efficient, secure and innovative. After all, these are the features that make the European power market unique in the world.

CACM 1.0 - increased competition and efficiency gains

The EU Guideline on Capacity Regulation and Congestion Management (CACM) entered into force in 2015. It translated the principle of European Market Coupling, which was to date a private initiative of Power Exchanges and TSOs, into European law. CACM also introduced the framework of Nominated Electricity Market Operators, in short NEMOs. The title is awarded by European member states to Power Exchanges having gone through a designation process. This functions like a certificate that enables NEMOs to not only operate power markets in their historical home markets, but to use the status like a passport to operate in new markets. Market participants can then choose between several Power Exchanges in a country, which increases competition. A framework for several NEMOs to operate in one market is set by Multi-NEMO Arrangements, agreed between the respective Power Exchanges and TSOs. Since the implementation of CACM, EPEX SPOT has launched Day-Ahead and Intraday trading in the Nordic region (2020) and in Poland (2021).

CACM formally set out the structure of the pan-European Day-Ahead and Intraday Coupling (SDAC and SIDC). SDAC and SIDC allocate scarce cross-border transmission capacity in the most efficient way by coupling wholesale electricity markets from different regions through a common algorithm, simultaneously taking into account cross-border transmission constraints, thereby maximising social welfare.

The efficiency of the European Internal Energy Market is key to achieve the climate goals.

CACM 2.0 – quo vadis?

The EU Commission has asked the Agency for the Cooperation of Energy Regulators (ACER) to provide “reasoned amendments” to CACM to make the Market Coupling setup fit for future challenges. In June 2021, ACER has consulted with relevant stakeholders to draft a recommendation for the Commission. In the consultation, ACER has suggested a complete overhaul of the governance of Market Coupling and a change of paradigm in the European electricity market design, e.g. the ban of organised trading outside of SDAC and SIDC.

Focus on governance endangers capacity of power market to deliver on climate goals

Despite the fierce criticism of 50+ organisations that operate the pan-European electricity Market Coupling on a daily basis, ACER has submitted its recommendation to the EU Commission. 
EPEX SPOT reiterates its position that the three critical objectives of a CACM revision should be:

  • Maintain safe and secure operations of Market Coupling; 

  • Ensure efficient market functioning;

  • Deliver on the energy transition and climate goals with innovative products.

Policy-makers and stakeholders should not let themselves get distracted from these objectives – especially at such critical times where the efficiency of the European internal energy Market is key to achieve the climate goals.

In ACER’s proposal, a disproportionate focus has been placed on governance. It would lead to a purely administrative exercise, perpetually binding the resources of all stakeholders for years, without any proof or assessment that it would lead to efficiency gains. In the meantime, the real challenges and most pressing needs of the market are not addressed at all. Worse, ACER’s proposal would deter innovation in electricity markets and put the current functioning under high risk of failure. 

CACM 2.0

Our proposal: foster innovation to accelerate the energy transition

EPEX SPOT’s priority is that electricity markets can further develop in line with the EU’s goal of climate neutrality by 2050. We call for:

  • Building on the existing Market Coupling setup while increasing organisational efficiency and decision-making processes to reduce time-to-market of new products and features;

  • Fostering market innovations, to be able to integrate ever-growing shares of renewables in the power system and drive the decarbonisation, decentralisation, and digitalisation of the power system;

  • Enabling competition between power exchanges across all EU Member States to provide market participants with additional trading opportunities and enlarge the benefits of Market Coupling for European consumers.