ENTSO-E has published a new policy paper on forward electricity markets calling for sound economic justification to support hedging in forward electricity markets. 

The paper presents transmission system operators’ (TSOs) proposal reversing the current hedging analysis approach as described in Article 30 of the Forward Capacity Allocation (FCA) Regulation - Commission Regulation (EU) 2016/1719. TSOs propose that, instead of mandatory long-term transmission rights (LTTR) issuance, National Regulatory Authorities (NRAs) should first assess hedging needs and opportunities within each bidding zone, considering both power and non-power products, before deciding upon which financial instruments to be used in order to support forward electricity markets. 

To support market participants’ hedging in long-term markets, NRAs should establish a harmonised method for analysing both hedging needs and existing hedging opportunities. This analysis will guide decisions on whether additional support from TSOs or regional hedging concepts is required. 

Read the paper here.