The document summarizes the views of Nordic energy regulators on the future of the Nordic electricity markets. It discusses NordREG, an organization of Nordic energy regulators that promotes efficient energy markets. The regulators are committed to a vision of highly competitive, innovative markets that enable consumers and new players to contribute to the energy transition. Three strategic principles are price signals, active consumers, and a dynamic regulatory framework. The regulators also aim to further integrate networks and harmonize electricity market rules in line with EU targets of carbon neutrality by 2050.

1. How do the Nordic Regulators see the Future of
the Nordic (Baltic Sea) Electricity Markets
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SIMO NURMI
Director General of Energy Authority of Finland,
Energiavirasto
Chair of NordREG 2020
11th March 2019

2. NordREG
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• An organisation based on a voluntary cooperation between the Nordic energy regulators
– Finland, Energiavirasto
– Norway, Reguleringsmyndigheten for energi
– Sweden, Energimarknadsinspektionen
– Denmark, Forsyningstilsynet
– Iceland, Orkustofnun
• The basis for the cooperation within NordREG is to identify areas of work where cooperation
can take the following forms
– Exchange of views
– Working together to map and analyse energy market issues
– Producing reports and statements
– Taking common action to influence the development of the Nordic and the European energy markets
• Nowadays also a platform for a formal and legally binding cooperation
– E.g. implementation of European network codes and guidelines in the Nordic area

3. Mission and Vision of NordREG
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• Mission
In cooperation, we actively promote legal and institutional framework and conditions
necessary for developing the Nordic and European electricity markets
• Vision
Actively promoting efficient and advanced energy markets, for the benefit of consumers
towards a decarbonized society

4. An overview of the Nordic electricity market
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• The Nordic power system is a mixture of generation sources, where hydro, nuclear, wind
and bio mass are the main sources of power
• The Nordic region has a plenty of energy intensive industry and a large share of electricity
heated houses
– Therefore the electricity consumption and the share of electricity of total power use is higher than
in the rest of the EU
• The Nordic countries have a higher share of renewable electricity production compared to
the rest of EU
– Net electricity generation 400 TWh » 54 % hydropower, 10 % wind energy, 6 % bio mass and
22 % nuclear energy*
– 70 % of the electricity production is renewable and more than 90 % carbon neutral
• The Nordic electricity market has been a real success story over the past years – economy,
technology, environment etc.
– We must ensure that the success story continues *Source: ENTSO-E Statistical Factsheet 2018

5. Nordic Regulators are fully committed to the ‘Ollila’s vision’
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• Some of the key visionary elements for developing the Nordic electricity market are written
down in the ‘Ollila’s report’ from the year 2017
– E.g. establishing annual Nordic Electricity Market Forum
• 2030 vision for the Nordic electricity market by the Nordic Council of Ministers
– In 2030, the Nordics have the world’s most competitive, innovative, and consumer-oriented
electricity market, that contributes to reaching the ambitious Nordic climate goals
 A society characterized by digitalization, automatization and electrification is backed by a highly reliable
electricity supply
 The electricity market brings increasing benefits to the society as it enables consumers and new market
players to contribute to the energy transition with innovative solutions
 The grid infrastructure is smartly operated, cost-efficient, robust and without undue constraints, being
optimized from a regional perspective
 The Nordic electricity market is a positive driving force in the European electricity market integration,
market development and in the effort towards reaching ambitious climate goals
• Nordic Regulators are in close cooperation aiming towards this common Nordic vision

6. 3 strategic principles of the Nordic cooperation
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• The following 3 principles are the main drivers when the Nordic Regulators are promoting
Nordic and European (and also Baltic Sea) electricity markets
1. Correct price signals
– Cross border trade of electricity should not be restricted
– Capacity of interconnectors provided to the market should be based on common and
coordinated principles to ensure transparent and reliable information
– Capacity mechanisms should be eliminated through a well-functioning energy-only market
– Possible adequacy challenges should be handled by efficient investments and/or amending the
existing market design
– Promote a Nordic market design that is fit for future challenges such as increased need for
flexibility

7. 3 strategic principles of the Nordic cooperation
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2. Active consumers
– Competitive retail markets with low entry barriers
– Access to transparent relevant and accessible information to make well-informed decisions
– Trustable markets – monitoring compliance with the regulation will increase trust in the retail
markets and increase activity for suppliers and consumers
– Consumers own their own data and flexibility, and are empowered to make informed decisions
– Facilitate efficient solutions to handle challenges and opportunities of new technology
3. Dynamic framework enabling advanced energy markets
– Markets where possible, and efficient regulation of natural monopolies
– Cost-reflective grid tariffs and connection fees that improve efficiency and provide fair distribution
of grid costs
– Market based procurement of distributed flexibility resources
– Promote digitalization to ensure efficient solutions

8. Enhanced electricity network integration and harmonization of electricity markets
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• Main driver is the implementation of the European regulation
• Implementation of the Clean Energy Package regulation and ensuring a common, harmonized
understanding and application of the rules, e.g.
– Recommendation from NordREG on Nordic implementation guide for articles 10, 12, 14 and 18
– Recommendation from NordREG on common Nordic regulatory framework for independent
aggregators
• Continue effective implementation of European network codes and guidelines, e.g.
– Implementation of common cross-zonal capacity calculation methodology (CCM)
– Establishment of the Nordic Regional Coordination Centre (RCC)
– Implementation of the TSOs’ Nordic Balancing Model (NBM)
• Continue cooperation and coordination of the work regarding the common Nordic end-user
market and market conditions for customers in the Nordic retail markets for electricity
– Harmonized and common market rules instead of set of different national rules

9. Enhanced electricity network integration and harmonization of electricity markets
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• Transition of the energy system to a carbon neutral system – EU 2050, Finland 2035
– Wind power (both onshore and offshore), nuclear energy (in Finland) and inevitable also solar energy
– Marked based drivers should play essential role, e.g. EU emissions trading system
• Integration of the networks and harmonization of the market rules will be continuously deeper
in the Nordic and European level
– Electricity trade between the Nordic and the Central European countries (+ UK) will grow
– Electricity consumption in the Nordic countries will grow due to the electrification of transportation
and heating – and probably also due to the industry
– Sector integration and other advanced technologies make the role of electricity even more essential
• The regulation must guide, encourage and adapt to the changes of system and markets
– It is up to politicians and ministries to make the necessary changes of legislation
– Regulators must strictly follow the legislation when executing it
 Also bear in mind the consequances of executing
• Guiding principle should be common Nordic/European benefit instead of national interests

10. Thank You for Your Attention!
More information
Simo Nurmi
simo.nurmi@energiavirasto.fi
+358 29 5050 011