The long-term electricity market, the so-called forward market, has an important role in allowing participants to hedge positions ahead of the day-ahead timeframe. In the Nordic region, trading and hedging in the forward timeframe is purely financial, and the foundation for the forward market is the availability of highly liquid system price products. For parties wishing to hedge area price difference, EPADs (Electricity Price Area Differentials) are available for most price areas. However, concerning the EPAD market, in some bidding areas it is put forward by market participants that they do not have the level of liquidity that is desired. Therefore, the Nordic NRAs wish to explore if and how TSOs could facilitate enhancement of the function of the financial market.
The aim of this study is to gain knowledge on alternative models for TSO involvement in the financial electricity market and the impact the models could bring along in the market.
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