National capacity mechanisms in the European internal energy market: Opening the doors to neighbours

In this paper the regulatory basis for the effective participation of foreign agents in national CRMs is discussed. The authors support that two pillars are required: (1) stronger coordination among TSOs1 and respect for the Security of Supply Directive and (2) introduce a particular type of firm cross-border nominations associated to the CRMs commitments. These proposed nominations are to be considered only in situations of system stress. As discussed here, this allows not requiring any type of ex-ante cross-border capacity reservation, thus avoiding many of the inefficiencies associated to traditional physical bilateral contracts.