Eight Years in the Making: Power Without Borders in Europe

Bloomberg – After almost two years of delays, Germany, France and their neighbors in central-western Europe connected their electricity markets on Wednesday under a system that lets prices dictate where power flows between countries. Flow-based market coupling matches supply and demand across borders, sending electricity to where prices are highest. Average day-ahead rates are expected to rise in Germany, and decline in Belgium and the Netherlands, according to data compiled by Energy Brainpool GmbH, a Berlin-based consultant. Eight years ago, a group of 29 energy ministers, regulators, exchanges and grid operators from Germany, France, Belgium and the Netherlands first agreed to improve their cross-border flows. The project, originally scheduled to start in 2013, better manages the way power networks are used, which means that on a breezy day in northern Germany, power from a wind turbine can reach a hospital in France. “Flow-based market coupling, which is finally starting, might lead to higher exports from Germany into neighboring countries and definitely would be a supportive element for wholesale power prices in Germany,” Alfred Hoffmann, vice president for portfolio management at Vattenfall AB’s energy trading unit in Hamburg, said by phone on May 11, without being more specific. In flow-based coupling, … continue reading

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