Market Coupling Operator (MCO) function
'Market Coupling Operator (MCO) function' is the task of matching orders from:
- the day-ahead markets, and
- the intraday markets.
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 MCO function is performed for different bidding zones and simultaneously allocates cross-zonal capacities (Article 2(30) of the CACM Regulation).
According to the ACER Monitoring report of 30 January 2019 on the implementation of the CACM Regulation and the FCA Regulation (p. 5) “[t]he legal framework for the development, operation, governance and financing of the MCO Function for the single day-ahead and intraday coupling is complex and suboptimal. The main problem is that the responsibility for the development and operation is given to NEMOs, which may not have sufficient incentives to deliver an optimal setup of the algorithms and associated products, because (i) they compete with each other, while at the same time they need to cooperate and make decisions in the wider European interest to ensure a robust and reliable development and operation of the single coupling and (ii) they rely largely on TSOs to recover their costs, whereas TSOs are reluctant to cover those costs without being involved in the development and operation of those algorithms and products. Therefore, the Agency recommends a revision of the governance of the algorithms and of the associated cost recovery.”
In the same vein. 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 within the scope of MCO’s interest, including market coupling governance and operations.
In particular, it was assessed in the said Recommendation that the MCO governance defined in the current CACM Regulation proved “to be a source of problems in terms of decision making and implementation of relevant features and projects”.
ACER, moreover, suggested a timeline for “an appropriate restructuring of the MCO governance”.