Position PaperElectricity Market

Co-optimisation research and development

European Union03-02-2025European Union

Energy Traders Europe and Eurelectric have regularly expressed concerns regarding the potential implications of the implementation of a co-optimisation process by TSOs for the exchange of balancing capacities. In particular, one needs to consider the potential impacts of co-optimisation on established processes on market participant’s side as well as on TSO’s and NEMO’s sides. 

Despite the theoretical benefits that co-optimisation can bring to the electricity system, its implementation seems to come with several drawbacks and shortcomings.

The risks and welfare reducing elements of co-optimisation have been neglected in the discussion so far. Therefore, we strongly advocate for a change of direction, reflecting the concerns of market participants.

The R&D on co-optimisation should deliver a detailed CBA, properly assessing the potential benefits under realistic market assumptions and highlighting the costs involved with the collateral impacts on balancing capacity and wholesale markets. Only if such a comprehensive R&D study should robustly confirm a positive result, a respective recommendation on implementation should be issued. Furthermore, clear boundaries on the design choices available to R&D should be made to preserve existing market structures.

In the meantime, Energy Traders Europe and Eurelectric call for an open and continued involvement of market participants in setting the scope and working assumptions of the upcoming R&D work. Regular interactions would then be needed to allow for a mutual understanding and for a rightful development of any such work. 


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