Objective | Description | Assessment criteria | Description | Evaluation |
Cost efficient provision | Respecting existing investments: Ensure that market design do not undermine or devalue prior investments, providing continuity and stability for existing asset owners. This include prevent undue distortions of existing electricity markets. Participation barriers: Enable a wide range of market participants, including generators, storage providers, and demand-side resources, to freely participate on equal terms. Minimising overall system costs: Ensure the market delivers capacity at the lowest possible cost to consumers. Avoid over-procurement: Only procure the capacity needed to meet reliability standards, avoiding excess capacity. Market equilibrium: Ensure that the costs of maintaining capacity adequacy align with the societal value of having a reliable energy supply (value of lost load (VoLL)). Efficient use of resources: Maximise the use of available generation, storage, and demand response resources - in the Nordics and nationally. | Low degree of distortion | The solution has a neutral or positive impact to the market/industry (producers and consumers) business models, with low impact on prices - respecting existing investments. | Low degree High degree |
Market efficiency and inclusivity | Ensure the market delivers capacity at the lowest possible cost to consumers by fostering liquidity, encouraging innovation, and incentivising the adoption of new technologies and efficient solutions. | High effectiveness Low effectiveness | ||
Resource efficiency | Promote efficient use of resources. Maximise the use of procured generation, storage, and DSR resources - in the Nordics and Nationally | High efficiency Low efficiency | ||
Maintain system security | Adequate capacity procurement: Ensure sufficient capacity is procured to meet peak demand and avoid shortages. Reliability standards compliance: Meet established reliability standards to ensure continuous supply, especially during critical periods. System flexibility and reliability: Encourage reliable flexible resources that can ramp up or down to balance supply and demand fluctuations. | Effectiveness | Is effective in solving the problem, i.e. ensuring security of supply in a robust and reliable way, relative to other options. Does not consider cost or complexity of solving it. | High effectiveness Low effectiveness |
Support a zero-carbon system | Encourage renewable integration: Prioritise capacity mechanisms that facilitate the integration of wind, solar, and other renewable energy sources. Promote low-carbon technologies: Support investments in low or zero-carbon technologies such as battery storage, hydrogen, and carbon capture. Incentivise flexibility: Encourage flexible resources, such as demand-side response and storage, to support the variability of renewable energy. | Non-fossil | The solution exclusively promotes non-fossil options or allows support for both non-fossil and other energy sources | Non-fossil Incl. fossil |
Objective | Description | Assessment criteria | Description | Evaluation |
Transparent | Visibility of TSO needs, bids & results: Ideally open access to information, incl. historical data (results), TSO needs, bids, and commitments. Visibility of decision-making: Ensure that the decision-making processes, especially around auctions and capacity allocation, are transparent and well-documented. | Transparency | The solution promotes transparency | High transparency Low transparency |
Investable | Predictable revenue streams: Ensure that market participants can expect consistent and predictable returns over the long term. Support for new technologies: Encourage investment in innovative and emerging technologies (e.g., renewables, storage) by providing a level playing field or specific incentives. | Investor confidence | Degree of investor confidence, supporting efficient future investments. Provides sufficient incentives for targeted asset groups. Exposes industry to appropriate risks, i.e. risks they can manage | High confidence Low confidence |
Practical | Ease of Implementation: Ensure the market design is straightforward to implement, with minimal complexity for regulators, operators, and participants. Simplicity in Market Participation: Make it easy for generators, demand-side resources, and other participants to engage in the market without excessive administrative burden. Administrative Efficiency: Minimise the time and costs required to administer the market, including auction processes and compliance monitoring. | Ease of implementation | Is not complex to implement and can be delivered in an appropriate timeframe. The evaluation approach considers following factors: technical, political, regulatory complexities and time to market. | Low effort High effort |
Operational simplicity | Assesses operational simplicity for market participants as well as operators | Simple Complex | ||
Enduring | Long-Term Market Certainty: Provide clarity on future market conditions and regulations to foster investor confidence in long-term investments. Adaptability to Future Needs: Design the market to be flexible enough to accommodate evolving technologies, market conditions, and policy goals without frequent overhauls. | |||
Limit negative cross-border impact | Minimise distortion on neighbouring markets: Minimise unintended negative consequences on neighbouring markets. Given the interconnected nature of electricity markets, poorly designed support mechanisms can distort price signals, create inefficiencies, or lead to unfair cost burdens on neighbouring countries. Fair welfare distribution: Support mechanisms should not disproportionately benefit one country at the expense of another | Cross-border impact | Evaluate the impact on neighbouring markets, both with and without cross-border participation | Qualitative evaluation |
Constraint | Description |
Market based | The schemes should be implemented in a way that is consistent with general market principles, promoting competition and efficiency within the electricity market. |
Targeting new investments | The non-fossil flexibility support scheme should limit support to new investments. This include new capacity investments and upgrades to existing facilities or solutions. |
Non-fossil | The non-fossil flexibility support scheme specifically target flexibility resources that do not rely on fossil fuels, including flexible resources such as: Renewable dispatchable generation; energy storage and demand response. |
EU compliant | Compliance with EU energy regulations: The market design must align with existing EU regulations, such as the electricity regulation, to ensure that it will be approved by the European commission. |