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Finer time resolution in Nordic power markets: A Cost Benefit Analysis

Electricity markets are undergoing major changes, and the market design needs to be adapted to deliver the best market outcomes. One important question is which time resolution to apply in electricity markets, which is currently 1-hour intervals in the Nordic markets.

In order to investigate the merits of moving to finer time resolution, the four Nordic TSOs asked Copenhagen Economics together with E-Bridge Consulting to assess costs and benefits of implementing 15-minute resolution in the so called ‘imbalance settlement period’, also investigating different implementation options in terms of speed and design.

We found that going to 15-minute imbalance settlement period is a step in the right direction. This change would bring immediate benefits to the Nordic region through

An important additional benefit is that a 15 minute imbalance settlement period would lead to a more accurate price for flexibility or lack hereof, which will affect current investment incentives and shape the future demand and supply mix in becoming more flexible. This is a highly valuable characteristic in the future electricity system, facing the challenge of integrating volatile energy sources at a very large scale.

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