Nominated Electricity Market Operator (NEMO)
'Nominated Electricity Market Operator' (NEMO) is a market operator designated by the competent authority of the European Union Member State to participate in:
20 December 2021
ACER Recommendation on reasoned amendments to the Capacity Allocation and Congestion Management Regulation proposes changes to a wide range of topics, including:
The above NEMO’s definition is stipulated by Article 2(23) of the Commission Regulation (EU) 2015/1222 of 24 July 2015 establishing a Guideline on Capacity Allocation and Congestion Management - CACM (Regulation on market coupling).
It is also upheld by the 'Winter Energy Package' - according to Article 2(8) of the Regulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity (recast), ‘nominated electricity market operator’ or ‘NEMO’ means a’ market operator designated by the competent authority to carry out tasks related to single day-ahead or single intraday coupling’.
"The CACM Guideline lays down governance rules for the power exchanges acting as Nominated Electricity Market Operators (NEMOs), performing market coupling-related tasks. Most notably, it requires a formal designation of NEMOs by Member State authorities, defines voting requirements for certain proposals on which NEMOs have to agree, subjects those proposals to approval by NRAs and envisages fallback solutions where NEMOs fail to make those proposals.
... However, the governance regime of the CACM Guideline does not cover all cases and areas where NEMOs need to cooperate with each other, with TSOs and with NRAs, to agree and to take decisions to fulfil their tasks related to market coupling. For instance, it does not apply to the NEMOs' decisions necessary to implement the proposals approved by NRAs (such as decisions for procurement of common IT services). More generally, the CACM Guideline does also not establish a formal framework within which NEMOs operate under regulatory oversight.
... The governance of power exchanges is especially important as far as their cooperation and execution of tasks related to market coupling in the day-ahead and intraday timeframe is concerned. To be effective, this governance should ensure that NEMOs cooperate within a formal framework under regulatory oversight and that they take decisions, which need to be coordinated, according to transparent and generally applicable rules. Moreover, such a governance regime should not be voluntary, but binding. It should therefore be considered:
a) to require NEMOs to establish a common body through which they cooperate with regard to the performance of their predefined tasks (similar to ENTSO-E);
b) to establish clear general rules for the NEMOs' coordinated decision making and their implementation (including fallback solutions for NEMOs' failure to deliver);
c) to lay down rules for the monitoring and effective regulatory oversight of the common NEMO body by the Agency, which should be given the power to issue binding decisions, and for the imposition of sanctions in case of non-compliance with these decisions or, more generally, with their tasks."
Article 7(1) of the revised Regulation stipulates that: [t]ransmission system operators and nominated electricity market operators shall jointly organise the management of the integrated day-ahead and intraday markets based on market coupling as set out in Regulation (EU) 2015/1222. Transmission system operators and nominated electricity market operators shall cooperate at Union level or, where more appropriate, on a regional basis in order to maximise the efficiency and effectiveness of Union electricity day-ahead and intraday trading. The obligation to cooperate shall be without prejudice to the application of the provisions of Union competition law. In their functions relating to electricity trading, Transmission system operators and nominated market operators shall be subject to regulatory oversight by regulators and the Agency pursuant to Article 59 of [recast of Directive 2009/72/EC as proposed by COM(2016) 864/2] and Articles 3 to 16 of [recast of Regulation (EC) No 713/2009 as proposed by COM(2016) 863/2]."
The wording of both definitions indicates a NEMO is a form of the market operator.
Under Article 4(1) of the CACM each EU Member State electrically connected to a bidding zone in another EU Member State was required to designate one or more NEMOs by 14 December 2015.
The EU Member States are required to inform the European Agency for the Cooperation of Energy Regulators (ACER) of the designation and revocation of NEMOs.
The European Commission's legislative initiative of 30 November 2016 for a Regulation of the European Parliament and of the Council establishing a European Union Agency for the Cooperation of Energy Regulators (recast - COM(2016) 863 final 2016/0378 (COD)) proposed:
- to assign the ACER with the tasks of overseeing whether NEMOs carry out their functions in accordance with the CACM as well as of monitoring progress in establishing NEMOs' functions under CACM;
- to grant to the ACER the right to request information from NEMOs, where appropriate, and to issue relevant recommendations to the European Commission.
These measures have been finally stipulated in Article 8 of the Regulation (EU) 2019/942 of the European Parliament and of the Council of 5 June 2019 establishing a European Union Agency for the Cooperation of Energy Regulators (recast).
The list of designated NEMOs is maintained in the form of the electronic database by ACER on its website (see the ACER's NEMOs list for day-ahead and intraday markets and ACER's NEMO dedicated website).
The key operational feature of the NEMO design is that NEMO designated in one EU Member State have (with limited exceptions) the right to offer day-ahead and intraday trading services with delivery in another EU Member State.
The trading rules in the latter Member State apply without the need for designation as a NEMO in that Member State.
The NEMO function of fundamental importance is the operating the single day-ahead coupling and the single intraday coupling algorithm.
NEMOs act, moreover, as market operators in national or regional markets.
Their tasks include:
- receiving orders from market participants,
- having overall responsibility for matching and allocating orders in accordance with the single day-ahead coupling and single intraday coupling results,
- publishing prices and
- acting as central counterparties for clearing and settlement of the exchange of energy resulting from single day-ahead and intraday coupling, according to relevant participant agreements and regulations.
Article 59(5) of the CACM
Before the intraday cross-zonal gate closure time, market participants shall submit to relevant NEMOs all the orders for a given market time unit. All NEMOs shall submit the orders for a given market time unit for single matching immediately after the orders have been received from market participants.
Article 58(1) of the CACM
Each coordinated capacity calculator shall ensure that cross-zonal capacity and allocation constraints are provided to the relevant NEMOs no later than 15 minutes before the intraday cross-zonal gate opening time.
Multiple NEMOs in one bidding zone
ACER Recommendation of 20 December 2021 on reasoned amendments to the Capacity Allocation and Congestion Management Regulation proposed changes to a wide range of topics involving NEMOs, including market coupling governance and operations.
The said Recommendation of December 2021 observes that the CACM Regulation established competitive NEMOs as a standard model (and a monopoly as an exemption) and that the monopoly NEMOs are an established practice in a number of Member States.
Where more than one NEMO in one bidding zone exist, operational issues involved are dealt with the Scheduled Exchange Calculation Methodologies agreed by the respective Transmission System Operators (TSOs).
Scheduled Exchange Calculation Methodologies will be adopted separately for:
(a) the day-ahead market (DA Scheduled Exchange Calculation Methodology Proposal, in line with Article 43 and 45 of the CACM - see Draft methodology for calculating Scheduled Exchanges resulting from single day-ahead coupling, 04.10.2016);
(b) the intraday market (the ID Scheduled Exchange Calculation Methodology Proposal, in line with Article 56 and 57 of the CACM - see Draft methodology for calculating Scheduled Exchanges resulting from single intraday coupling, 04.10.2016).
Scheduled Exchange Calculation Methodologies accommodate situations where there are more than one NEMO designated and/or offering day-ahead or intraday trading services in a particular geographic area.
In addition, according to Article 4(1) of Regulation 2015/1222, multiple NEMOs can be designated to perform single day-ahead and/or intraday coupling in a Member State.
For each NEMO, a NEMO Trading hub is intended to be defined.
Where multiple NEMOs operate within a geographic area, there will be multiple NEMO Trading hubs in that geographic area.
The example of NEMO operating in more than one bidding zone is Nordpool, which has been designated as a NEMO in 14 European countries.