The Role of the Hellenic Energy Exchange (HEnEx) in the EU Target Model and Legal Framework

The Role of the Hellenic Energy Exchange (HEnEx) in the EU Target Model and Legal Framework

Introduction

The Hellenic Energy Exchange S.A. (HEnEx) constitutes one of the fundamental pillars of the European Union’s Target Model, a strategy designed to establish a unified and competitive internal electricity market across Member States (European Commission, 2019). This initiative aims to enhance cross-border electricity trading, foster price convergence, and improve efficiency, transparency, and consumer welfare within the European energy sector (Meeus & Glachant, 2018).

Legal Framework and Regulatory Basis

The establishment of HEnEx is rooted in Law 4512/2018, which substantially amends Law 4425/2016 to align the Greek electricity market with EU Regulations and Directives for the internal electricity market (Hellenic Republic, 2018). These legislative changes were designed to transpose the provisions of Directive 2009/72/EC on common rules for the internal electricity market and Regulation (EC) No 714/2009 concerning cross-border electricity exchanges (European Parliament & Council, 2009).

This legal transformation reflects the market coupling principle, a cornerstone of the EU’s Third Energy Package, ensuring non-discriminatory access and promoting competition (Papadopoulos, 2020). Moreover, according to the European Court of Justice (Case C-17/03, VEMW and Others, 2005), energy market liberalization is an essential component of the EU’s internal market under Article 114 TFEU.

Objectives and Market Transformation

According to the Ministry of Environment and Energy, the Energy Exchange was established as a prerequisite for reorganizing the wholesale electricity market, aiming to:

• Couple the Greek market with other European markets, thereby enhancing competition and transparency.

• Achieve cost reductions for households and businesses through price convergence.

• Ensure security of supply by diversifying energy sources and promoting the integration of renewable energy sources (RES) (RAE, 2021).

This transition involved replacing the mandatory pool model with four distinct electricity markets, consistent with the EU Target Model:

1. Day-Ahead Market

2. Intraday Market

3. Balancing Market

4. Forward Market(ENTSO-E, 2020).

Institutional Role and Market Functions

HEnEx, established on June 18, 2018, following the restructuring of LAGIE S.A., operates under the supervision of the Hellenic Energy Regulatory Authority (RAE) as the Nominated Electricity Market Operator (NEMO) (HEnEx, 2023). Its role includes managing the physical electricity delivery markets and developing financial energy markets, such as futures and derivatives.

Its subsidiary, EnEx Clearing House S.A. (EnExClear), provides clearing and settlement services in compliance with Regulation (EU) No 648/2012 (EMIR), ensuring financial security and risk management in energy transactions (European Parliament & Council, 2012).

European Integration and Market Coupling

HEnEx is an active participant in the Price Coupling of Regions (PCR) initiative, the EU’s primary mechanism for single day-ahead market coupling. This integration process is governed by Commission Regulation (EU) 2015/1222 (CACM), ensuring harmonized rules for capacity allocation and congestion management, contributing to a single European energy market (European Commission, 2019).

Conclusion

The creation and development of HEnEx under Law 4512/2018, in alignment with EU legislation, represents a critical step toward achieving the EU Target Model. Its operation reinforces the principles of competition law, promotes market transparency, enhances consumer benefits, and supports decarbonization objectives under the European Green Deal.

References (APA with links)

• ENTSO-E. (2020). Market Coupling and European Electricity Markets. Retrieved from https://www.entsoe.eu

• European Commission. (2019). Clean Energy for All Europeans Package. Retrieved from https://ec.europa.eu/energy/topics/markets-and-consumers/market-legislation/clean-energy-package_en

• European Commission. (2020). European Green Deal. Retrieved from https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_en

• European Parliament & Council. (2009). Directive 2009/72/EC concerning common rules for the internal market in electricity. Retrieved from https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32009L0072

• European Parliament & Council. (2012). Regulation (EU) No 648/2012 on OTC derivatives, central counterparties and trade repositories (EMIR). Retrieved from https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32012R0648

• European Parliament & Council. (2015). Commission Regulation (EU) 2015/1222 establishing a guideline on capacity allocation and congestion management (CACM). Retrieved from https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32015R1222

• Hellenic Republic. (2018). Law 4512/2018 and amendments to Law 4425/2016 on electricity market organization. Retrieved from https://www.et.gr/idocs-nph/search/pdfViewerForm.html?args=5C7QrtC22wEwfV0n6NVeUHdtvSoClrL8hAgu5RQLvkDzV6LG5Mjv9uJInJ48_97uHrMts-zFzeyCiBSQOpYnSo3Lxqmcx4CN8zkF5FvwuBdIRGMnHSu8lJ4p2i6vlE8Qx5JpP0Q

• HEnEx. (2023). About Us. Retrieved from https://www.enexgroup.gr

• Meeus, L., & Glachant, J. M. (2018). Electricity Market Design: The European Target Model. Palgrave Macmillan.

• Papadopoulos, T. (2020). Liberalization of the Energy Market in Greece: Legal and Regulatory Challenges. Energy Law Journal, 41(2), 112-130.

• RAE. (2021). Energy Market Overview in Greece. Retrieved from https://www.rae.gr