2025-08-27

Regulatory Market Outlook – Collaboration is Key to Developing Europe’s Electricity Grid

The European Commission’s ambitious reform agenda presents both challenges and opportunities for the continued development and integration of Europe’s electricity grid. To better understand the current regulatory landscape, we spoke with our electricity market experts, Annika Widmark Sjöstedt and Kaj Forsberg, for an outlook on developments in 2025.

So far, it has been an eventful year for the electricity market regulation in Europe. With the release of the Affordable Energy Action Plan followed by the upcoming Grid Package, regulatory discussions have intensified, highlighting the urgent need for a more integrated and resilient electricity system. Annika explains:  

“Europe has one of the largest integrated electricity networks in the world. The goals presented in the most recently announced plans are not only important for Europe’s competitiveness, energy transition and security – they are critical. However, it is a complex system, requiring the whole of Europe to work together in order to achieve the goals.”  

A European Perspective 

Despite the complexity, time is of essence. The EU has identified a 32 GW interconnector gap to be closed by 2030. Bridging it requires stronger cross-border cooperation and tighter alignment between national policies and EU regulations and directives, as Annika puts it: 

“A national perspective on the electricity system will limit a country’s ability to manage the clean energy transition, ensure security of supply, and boost competitiveness. A European perspective is the only way forward”. 

Cross-border Collaboration on the agenda

One current example of cross-border collaboration is the joint effort by Transmission System Operators (TSOs) and Nominated Electricity Market Operators (NEMOs) to introduce 15-minute Market Time Units (MTU) in the single Day Ahead-market, from the current 60-minute format. This shift is expected to improve market efficiency and allow for greater integration of renewable energy. 

“Even though the project go-live has recently been postponed, it is a great lesson learned on how important it is that all parties are on the same page, working towards one common goal. It is only then that we can work effectively and create the change needed”, says Kaj, 

Another significant legislative development is the proposal for Capacity Allocation and Congestion Management 2.0 (CACM 2.0), once again emphasizing collaboration and market harmonization, explains Kaj:  

“One element of the proposal that may pass largely unnoticed, but also proves to be quite powerful, is an ambition from the Commission to make market information even more easily and publicly available. Access to information is one of the key drivers for development and as such, this should help all stakeholders better understand how the system works and where value can be added.” 

The path ahead  

Turning the page to the second half of 2025, great things are to be expected in regulatory and legislative development. Annika concludes:   

“One of our prioritized areas is to have interconnector TSOs, like Baltic Cable, defined and acknowledged in EU legislation in a way that considers its’ specific features and benefits, business model and operations. By clearing the legal path for more interconnector operators and owners, the outlook for having an integrated and unified European energy market would strengthen significantly.”