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Energy Transition Shorts: Flow-based market coupling - the big shift in Nordic energy
14/4/25
5 min
Renewable energy
Insight
Key takeaways from this episode:
In this video Tom Williams and Coos Battjes explore zonal pricing in practice. It focuses on the Nord Pool market (Sweden and Norway), where Downing has many renewable energy assets.
As both Sweden and Norway are split into zones: generation-heavy north with low prices and demand-heavy south with high prices. Residents in the south, especially in Norway, have expressed frustration over paying more.
The primary solution for this – building more transmission capacity – takes time. In the interim, Nord Pool introduced flow-based market coupling, optimising how capacity is allocated between day-ahead and intraday markets. While helpful, it created some anomalies and tensions between countries.
Sweden’s response has been to hold back more reserve margins, preventing extreme pricing swings. This suggests a period of adjustment and learning, with gradual improvements expected as systems stabilise. The pair highlight that zonal pricing works in theory, but practical and political realities make it complex to implement smoothly.
Energy and Infrastructure at Downing
Downing’s dedicated team of renewable energy and infrastructure specialists provide investors with access to renewable energy, grid infrastructure and energy storage opportunities across the UK and Northern Europe. From developing and constructing large-scale renewable energy projects to in-house asset management, we have integrated teams providing end-to-end capabilities.
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Contents
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What is Flow-Based Market Coupling? How is it working in the Nordics since inception? Join Tom Williams, Partner and Head of Energy & Infrastructure, and Coos Battjes, Energy Markets Specialist, as they explore this topic.
Key takeaways from this episode:
In this video Tom Williams and Coos Battjes explore zonal pricing in practice. It focuses on the Nord Pool market (Sweden and Norway), where Downing has many renewable energy assets.
As both Sweden and Norway are split into zones: generation-heavy north with low prices and demand-heavy south with high prices. Residents in the south, especially in Norway, have expressed frustration over paying more.
The primary solution for this – building more transmission capacity – takes time. In the interim, Nord Pool introduced flow-based market coupling, optimising how capacity is allocated between day-ahead and intraday markets. While helpful, it created some anomalies and tensions between countries.
Sweden’s response has been to hold back more reserve margins, preventing extreme pricing swings. This suggests a period of adjustment and learning, with gradual improvements expected as systems stabilise. The pair highlight that zonal pricing works in theory, but practical and political realities make it complex to implement smoothly.
Energy and Infrastructure at Downing
Downing’s dedicated team of renewable energy and infrastructure specialists provide investors with access to renewable energy, grid infrastructure and energy storage opportunities across the UK and Northern Europe. From developing and constructing large-scale renewable energy projects to in-house asset management, we have integrated teams providing end-to-end capabilities.
Share
What is Flow-Based Market Coupling? How is it working in the Nordics since inception? Join Tom Williams, Partner and Head of Energy & Infrastructure, and Coos Battjes, Energy Markets Specialist, as they explore this topic.
Key takeaways from this episode:
In this video Tom Williams and Coos Battjes explore zonal pricing in practice. It focuses on the Nord Pool market (Sweden and Norway), where Downing has many renewable energy assets.
As both Sweden and Norway are split into zones: generation-heavy north with low prices and demand-heavy south with high prices. Residents in the south, especially in Norway, have expressed frustration over paying more.
The primary solution for this – building more transmission capacity – takes time. In the interim, Nord Pool introduced flow-based market coupling, optimising how capacity is allocated between day-ahead and intraday markets. While helpful, it created some anomalies and tensions between countries.
Sweden’s response has been to hold back more reserve margins, preventing extreme pricing swings. This suggests a period of adjustment and learning, with gradual improvements expected as systems stabilise. The pair highlight that zonal pricing works in theory, but practical and political realities make it complex to implement smoothly.
Energy and Infrastructure at Downing
Downing’s dedicated team of renewable energy and infrastructure specialists provide investors with access to renewable energy, grid infrastructure and energy storage opportunities across the UK and Northern Europe. From developing and constructing large-scale renewable energy projects to in-house asset management, we have integrated teams providing end-to-end capabilities.
Share
Key takeaways from this episode:
In this video Tom Williams and Coos Battjes explore zonal pricing in practice. It focuses on the Nord Pool market (Sweden and Norway), where Downing has many renewable energy assets.
As both Sweden and Norway are split into zones: generation-heavy north with low prices and demand-heavy south with high prices. Residents in the south, especially in Norway, have expressed frustration over paying more.
The primary solution for this – building more transmission capacity – takes time. In the interim, Nord Pool introduced flow-based market coupling, optimising how capacity is allocated between day-ahead and intraday markets. While helpful, it created some anomalies and tensions between countries.
Sweden’s response has been to hold back more reserve margins, preventing extreme pricing swings. This suggests a period of adjustment and learning, with gradual improvements expected as systems stabilise. The pair highlight that zonal pricing works in theory, but practical and political realities make it complex to implement smoothly.
Energy and Infrastructure at Downing
Downing’s dedicated team of renewable energy and infrastructure specialists provide investors with access to renewable energy, grid infrastructure and energy storage opportunities across the UK and Northern Europe. From developing and constructing large-scale renewable energy projects to in-house asset management, we have integrated teams providing end-to-end capabilities.
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