Source - CACM Regulation (EU) 2015/1222

Title: Commission Regulation (EU) 2015/1222 of 24 July 2015 establishing a guideline on capacity allocation and congestion management (CACM) Reference: EU 2015/1222 (CACM Regulation) Publisher: European Commission Published: OJ L 197, 25.7.2015, pp. 24–72 In force: Yes; consolidated version 15/03/2021 ELI: http://data.europa.eu/eli/reg/2015/1222/oj Legal basis: Regulation (EC) 714/2009 Art. 18.3(b) and 18.5 Language: Clipping in Swedish (SV); original English

The CACM Regulation establishes harmonized rules for capacity allocation and congestion management across the EU’s day-ahead and intraday electricity markets. It is the primary legal basis for the flow-based capacity calculation methodology (Flow-Based Capacity Calculation) and for single price coupling (cross-border market integration). In the Nordics, CACM is the legal foundation for the transition from NTC to flow-based capacity allocation, which was implemented in October 2024.

Key provisions

Nominated Electricity Market Operators (NEMOs) (Arts. 4–8)

Art. 4: Each Member State must designate at least one NEMO (nominerad elmarknadsoperatör) to carry out price coupling and cross-zonal intraday markets. In Sweden, Nord Pool is the designated NEMO.

Art. 7: NEMO obligations include: receiving orders from market participants, matching and allocating orders per price coupling results, publishing prices, and determining/clearing resulting contracts.

Art. 6: Designation criteria include technical capability, non-discriminatory treatment of market participants, internal cost accounting separation between MCO functions and other activities, and arrangements for market surveillance.

Capacity calculation methods (Arts. 19–26)

Art. 20: TSOs must jointly develop capacity calculation regions and submit common capacity calculation methodologies to NRAs for approval.

Art. 21: Two permitted methods:

1. Flow-based method (flödesbaserad metod) — the primary method where capacity between bidding zones is highly interdependent. Models power flows physically using PTDFs (power transfer distribution factors) to calculate available capacity at each critical network element. Must be applied first where interdependencies are significant.
2. Coordinated NTC method — may only be used where capacity between zones is less interdependent and flow-based provides no added value.

Art. 20(7): Flow-based must be implemented first after consultation with market participants and sufficient preparation time. The CORE region (Central Western Europe) implemented flow-based for day-ahead in June 2021. Nordic/Baltic region implemented flow-based day-ahead coupling in October 2024 — this is the transition referenced in Flow-Based Capacity Calculation and Bidding Areas.

Common grid model (Arts. 16–18)

Art. 16: All TSOs must develop individual grid models (including production units and loads relevant for capacity calculation) and merge them into a common grid model (CGM) for flow-based calculation.

Art. 17: CGM must reflect the individual network model of each TSO’s system, including expected generation and load patterns.

Price coupling and bidding zone configuration (Arts. 32–40)

Art. 32 (Bidding zone review process): ENTSO-E must perform reviews of bidding zone configurations to assess whether current zones reflect structural congestion. The review must consider:

• Price divergence between zones
• Cross-zonal capacity utilization
• Economic welfare effects of different configurations
• Physical congestion within zones

Sweden’s four bidding zones (SE1–SE4) were established and reviewed under this framework. The persistent SE1–SE4 price differences reflect the structural north-south congestion that NordSyd is designed to address.

Art. 36: Requirements for the price coupling algorithm — must maximize economic surplus, apply proper capacity constraints, have a fall-back mechanism, and produce consistent prices.

Art. 37: The single day-ahead coupling (SDAC) algorithm (EUPHEMIA) jointly operated by NEMOs must implement the price coupling requirements.

Intraday markets (Arts. 51–63)

Art. 51: Cross-zonal intraday capacity must be made available on a continuous basis (continuous intraday cross-zonal gate).

Art. 54: Intraday capacity must be calculated and allocated using flow-based or coordinated NTC methods.

Art. 55: Minimum cross-zonal capacity available for intraday: no explicit 70% rule in CACM (that is in Electricity Market Regulation 2019/943 Art. 16); CACM establishes the framework within which the 70% rule operates.

Governance and cost recovery (Arts. 70–77)

Art. 70: Costs arising from implementation may be covered through network tariffs or other appropriate mechanisms.

Art. 72: NEMOs may recover their actual, reasonable and proportionate costs for the tasks required under CACM.

CACM and Nordic implementation

The CACM is the primary legal instrument governing how the Nordic market (Nord Pool) operates its day-ahead coupling with Central European markets. Key Nordic applications:

1. Flow-based capacity calculation: CACM Art. 21 required this as the primary method; the Nordic/Baltic TSOs (including Svk) jointly agreed implementation for October 2024 under the Nordic CCM (Capacity Calculation Methodology) approved per CACM’s NRA approval process.

2. Bidding zone review: CACM Art. 32 reviews of SE1–SE4 configurations have been conducted. Sweden has maintained four zones despite discussions about reconfiguration.

3. NEMO designation: Nord Pool is Sweden’s designated NEMO and the primary pan-Nordic exchange. EPEX SPOT also operates in the Nordic market.

4. Congestion rent: Under CACM, revenue from capacity allocation (congestion rent) must be used for guaranteed capacity, investment in new capacity, or as a tariff-reducing measure — relevant to how Nordic TSOs use CRA (Congestion Rent Allocation) funds.

Relationship to existing wiki topics