Research team: The project will be carried out by a teman from the LUT Energy Research Institute at Lappeenranta University of Technology in Finland led by Prof. D.Sc.(Tech) Satu Viljainen.

Background and purpose of this study

The purpose of this study is to gain knowledge about interconnecting markets with different market designs. The Nordic, Baltic and Russian electricity markets will be used as examples. Russian electricity market design differs significantly from Nordic and Baltic market design. Firstly, Russia prices transmission using a nodal pricing scheme, while the Nordic and Baltic markets apply zonal pricing. Secondly, while the Nordic and Baltic electricity markets are energy-only, Russia is energy-and-capacity.

The results of this project will be especially relevant given current hopes of a market-based interconnection of the Russian and the Nordic-Baltic markets. The interconnection of markets applying nodal and zonal pricing has not been relevant up until now, and knowledge on the subject is lacking. Nodal pricing is applied by the PJM and the Texas electricity markets, but they cannot be used as examples, either because trading partners operate in regulated markets (PJM) or because the interactions cannot be classified as nodal-zonal interaction (Texas).

Reference group

Simon-Erik Ollus, Fortum
Mårten Bergman, Svenska Kraftnät
Mats Nilsson, Vattenfall
Peter Fritz, Sweco