Consultation – hedging opportunities in Norwegian bidding zones
The national regulatory authority (NVE-RME) is carrying out a consultation with market participants about their needs for cross-zonal risk hedging opportunities on Norwegian bidding zone borders.
The consultation takes place in form of a survey. The deadline for answering the survey and providing a response is 23 October 2023.
We would like your input
RME must analyse whether there are sufficient hedging opportunities in Norwegian bidding zones. In addition to the analysis, a survey of the market participants' needs for cross-zonal risk hedging opportunities must be carried out.
- To ensure a broad basis for decision-making, we would like the market participants to give us input on their need for hedging. We hope that the participants fill in the questionnaire as accurately as possible, says Tiril Henriksen Norvoll, Head of Section for markets and system operation at RME.
We ask that everyone who wishes to participate in the survey to use this form:
It is also possible to send us your views in a separate letter. The answers in the survey are public according to the Public Information Act and will be published. However, information that is subject to confidentiality is exempt from public disclosure. RME requests the market participants to state which information they consider as confidential and exempted from public disclosure.
RME must assess whether there is sufficient hedging opportunities
RME must decide whether it is necessary to introduce transmission rights or alternative measures by mid- February 2024. This follows from Commission Regulation 2016/1719 on establishing a guideline on forward capacity allocation (FCA).
FCA article 30 aims to ensure that there are sufficient opportunities for those who trade electricity to hedge against the volatility of the day-ahead price of the concerned bidding zone.
TSOs on a bidding zone border shall issue long-term transmission rights unless the competent regulatory authorities of the bidding zone border have adopted coordinated decisions not to issue long-term transmission rights on the bidding zone border. The regulatory authorities can decide not to introduce transmission rights if there are sufficient price hedging opportunities in the bidding area. The requirement to ensure that there are sufficient hedging opportunities can also be met through alternative measures. The decision must be made on the basis of an analysis carried out by the competent regulatory authorities on each side of the bidding area border.
RME will assess whether the products, or combinations of products, offered in the futures markets constitute a sufficient hedge against the volatility of the day-ahead price of the concerned bidding zone.
- We will do this analysis based on a method that has been prepared jointly with the other Nordic regulatory authorities. We will also take into account the possibility to hedge bilaterally, says Tiril Henriksen Norvoll, Head of Section for markets and system operation at RME.
Deadline for answering the questionnaire and providing input is 23 October 2023
The answer must be sent to rme@nve.no and marked with the reference number 202314137.
