The European Electricity Market

Part of a Bigger System

Europe is the largest integrated electricity market in the world. The system’s purpose is to deliver reliable, affordable, and clean electricity within the European Union members states and across their national borders. The market combines physical infrastructure, regulatory frameworks, and commercial platforms that allow electricity to move efficiently between regions.

Power Producers and Consumers

The European power generation includes a diverse mix of producers from wind, solar, hydro, nuclear, geothermal, gas and coal power plants, across several countries. The consumers range from big industries, small and medium sized companies to individual consumers. Once the electricity is produced it is then traded at the market for electricity exchange - the Nominated Electricity Market Operators (NEMOs).

Both producers and consumers respond to the price signals – producers increase production if needed, and consumers adapt their consumption at higher prices.

Nominated Electricity Market Operators

The NEMOs run the platforms where electricity is traded – on the day-ahead, intraday, and balancing markets. These markets enable efficient price formation and allow the participants; power producers, consumers, NEMOs and Transmission System Operators (TSOs), to produce, consume, sell, buy and transmit electricity based on evolving needs.

Transparent and well-regulated trading supports competition and strengthens overall system efficiency.

Regulators

The European electricity market is regulated by European Union directives and regulations. These set the rules that guide how Europe’s energy markets and all their participants function and operate. This ensures transparency, fair competition, consumer protection, and alignment with EU-wide objectives such as decarbonisation and security of supply. By overseeing tariffs, market design, and cross-border cooperation, regulators are responsible for ensuring a stable framework needed for efficient and reliable electricity systems.

In the member states, the National Regulatory Authorities (NRA) are responsible for making sure that directives and regulations are implemented and followed.

There are more than 60 TSOs that connect the European Union and nearby markets. The TSOs are responsible for the secure and coordinated operations of Europe’s electricity system. Their role is to operate, maintain and develop the high-voltage networks that transport electricity over long distances. The TSOs balance supply and demand in real time to ensure system stability, in coordination with neighbouring countries.

Interconnectors

Interconnectors are the high-voltage transmission lines that physically connect the electricity systems of different countries to enable cross-border power flows. The transmission lines can be high-voltage direct current (HVDC) submarine power cables like Baltic Cable, or alternate current (AC) overhead lines running across national borders. By allowing regions to share resources, interconnectors strengthen security of supply, support competitiveness, and improve overall system efficiency.

Interconnector Transmission System Operator

Interconnector TSOs, like Baltic Cable, are specialised entities operating one or more interconnectors that connects electricity markets and AC grid areas. Interconnector TSOs are fully certified and fully regulated. Unlike control area TSOs, interconnector TSOs have neither control area responsibilities, customers, or tariffs. Their main source of income is congestion income.

Interconnector TSOs can play a significant role at the electricity market.

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