Reimagining cross-border participation in Capacity Remuneration Mechanisms 

Introduction

One of the most thought-provoking roundtable discussions that took place at the N-SIDE Energy Connect Event, held on April 16, 2026, in Brussels, centered on the regional aspects of system adequacy and Capacity Remuneration Mechanisms (CRMs).  Before turning to the discussion itself, it is useful to set the scene by looking at the broader trends reshaping system adequacy across Europe.

1. Demand growth: According to the International Energy Agency (IEA), electricity demand across the EU is projected to expand by approximately 300 TWh by 2030, representing an annual average growth rate of 2.3% per year over the 2026-2030 period.¹  This upward trajectory is primarily propelled by heat pumps, cooling systems, electric vehicles and data centres. This trend is expected to accelerate into the 2030s and beyond, supported by the EU Electrification Action Plan, which foresees electricity reaching 46% of final energy consumption by 2040.²
2. Increasing interconnection: Europe’s power grids are already highly integrated, but the scale of the energy transition requires a further step-change in cross-border capacity. ENTSO-E’s TYNDP 2024 identifies 88 GW of additional cross-border capacity as economically efficient by 2030, followed by a further 108 GW after 2030 and by 2040.³ The EU’s Grids Package is expected to reinforce this strategic direction by accelerating grid development, improving cross-border planning and supporting more efficient use of existing infrastructure.⁴
3. Rollout of CRMs: As RES penetration accelerates, low-marginal-cost generation is placing downward pressure on wholesale prices and weakening energy-only revenues. Several European countries already operate CRMs, while others are preparing new mechanisms to provide bankable availability signals for existing and new firm, flexible and demand-side capacity. The EU’s Clean Industrial Deal State Aid Framework (CISAF) simplifies State-aid approval for CRMs that follow predefined strategic-reserve or market-wide target models.⁵

As these trends intensify, the way countries plan, procure and value capacity increasingly has implications beyond their own borders. While CRMs remain rooted in national policy choices, both the EU legal framework and the physical reality of adequacy increasingly reinforce their regional dimension.

• Legal dimension: EU rules require CRMs to be open to eligible capacity providers from other Member States, making direct cross-border participation an integral part of CRM design rather than an optional add-on. 
• Physical dimension: As interconnection increases, adequacy outcomes naturally become more regional. RES-dominated systems can face correlated scarcity risks: for example, low wind output in Belgium may coincide with low wind output in the Netherlands, limiting the extent to which neighbouring systems can be assumed to provide independent firm support.

Against this backdrop, our roundtable explored two practical questions that are becoming increasingly important: what can be learned from existing cross-border CRM experience, and what could the next phase of CRM design and policy in Europe look like?

What is existing cross-border CRM experience telling us? 

The first takeaway was that Europe still has relatively limited practical experience with direct cross-border participation in national capacity mechanisms. Only a small number of implementations exist, which means the evidence base remains narrow.

Direct cross-border participation means that a capacity provider located in one country can participate directly in another country’s CRM, competing alongside domestic resources and taking on equivalent availability obligations. The volume of foreign capacity that can participate is capped by the amount of cross-border capacity that can be reliably counted between the two systems, known as the Maximum Entry Capacity.

The Belgian CRM was cited as one of the key examples. The discussion suggested that, so far, the experience has not been especially smooth. Participants pointed to the costs of compensating neighbouring TSOs to support delivery of the scheme, as well as the operational complexity involved in making the arrangement work in practice.

The discussion also touched on transparency and reliability. Cross-border CRM participation can require TSOs to rely on data and processes that they do not fully own or control. In theory, this may be manageable; in practice, it can quickly become a constraint if roles, information flows and incentives are not sufficiently clear.

The roundtable also questioned whether direct cross-border participation always delivers genuine additional adequacy value, or whether it may sometimes remunerate capacity outcomes that would have materialised through market coupling and imports anyway.

Taken together, these early lessons suggest that direct cross-border participation is possible, but far from frictionless. They also raise a natural question: how can it be improved?

What lessons can be learnt from SDAC & SIDC? 

This is where the discussion pointed to a useful source of learning: Europe has already built large-scale cooperation models in other areas, notably through Single Day-Ahead Coupling (SDAC) and Single Intraday Coupling (SIDC). These experiences do not provide a direct blueprint for CRM coupling, but they do offer lessons on how to organise collaboration across many actors, define common processes and manage the tension between national interests and regional efficiency.

The concept of transposing market coupling to CRMs was presented by one TSO, with reference also made to a Compass Lexecon paper prepared for Eurelectric.⁶ Under this model, capacity procurement would be coordinated across participating countries, while national mechanisms would remain formally distinct. Each country could still retain elements of its own CRM design and define its own capacity requirement. What changes is the procurement layer: a single coupled auction clearing mechanism would allocate capacity and cross-border entry rights together. This would help manage arbitrage risks between different CRMs and address concerns around double selling.

Importantly, this model would not require full harmonisation of all CRM rules. As in wholesale electricity markets, national differences could remain, for example in local products, participation requirements, imbalance arrangements or scheduling rules. However, a minimum level of compatibility would be essential.

Is full CRM integration possible?

The roundtable also looked further ahead: could Europe eventually move towards a pan-European capacity mechanism by 2040 or 2050? While such a model still feels ambitious, the discussion was cautiously optimistic. Participants saw it less as an immediate leap from today’s national CRMs, and more as a gradual pathway: national mechanisms becoming more harmonised, regional models emerging first, and those regional arrangements eventually creating the conditions for broader European integration.

A fully integrated regional CRM would go further than market coupling. Instead of each country setting its own capacity requirement separately, the overall need would be defined through a regional resource adequacy assessment. In this model, cross-border capacity would no longer be treated through an ex-ante MEC calculation based on expected import or export margins during stress events. Instead, the expected availability of interconnection would be embedded directly in the regional auction design. The outcome would be both a total regional capacity requirement and minimum national or zonal requirements, ensuring that reliability standards are met across all participating countries. 

CRM rules would also need to be more closely harmonised, for example around certification, ex-post controls and cost allocation, leaving more limited room for national specificities. 

Which of the models is better?

The roundtable seemed to agree that the current model of direct cross-border participation is operationally complex. It relies on cross-border processes, data exchanges and enforcement arrangements that may sit outside the direct control of the contracting TSO, and therefore requires a clear regulatory framework and robust cost-sharing arrangements. It can also raise concerns around duplicate remuneration where capacity participates in several CRMs simultaneously, as well as questions over whether some of the same adequacy contribution would have materialised through short-term energy markets anyway. 

Between the two models discussed for future evolution, participants suggested that the choice should not be framed as a binary one between “CRM coupling” and a “regional CRM.” They are better understood as points along the same spectrum. The real question is how far harmonisation should go, and how much governance authority national systems are willing to shift to the regional level.

It was acknowledged that the potential advantages of a fully integrated regional CRM are similar to those of market integration more generally: fewer distortions, a more consistent framework across countries, a stronger level playing field and clearer price signals for capacity providers. But these benefits come with significantly higher implementation and governance complexity. National rules, institutional responsibilities, certification processes, data exchange arrangements and TSO/NRA roles would all need to be aligned. Alignment would be required under both models, but much more deeply in a fully integrated regional CRM than in a coupled CRM.

In that sense, the “better” model may be the one that delivers the greatest regional efficiency gains without exceeding the level of harmonisation and governance complexity that participating countries can realistically sustain.

1. International Energy Agency, Electricity 2026, “Demand”, IEA, Paris, 2026, available at: https://www.iea.org/reports/electricity-2026/demand
2. European Commission, Electrification Action Plan, COM(2026) 595 final, Brussels, 17 July 2026, available at: https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=COM:2026:595:FIN
3. ENTSO-E, TYNDP 2024: Opportunities for a More Efficient European Power System by 2050 – Infrastructure Gaps Report, Executive Summary, available at: https://eepublicdownloads.blob.core.windows.net/public-cdn-container/tyndp-documents/TYNDP2024/foropinion/Infrastructure_Gaps_Report.pdf
4. European Commission, “European grids: European Grids Package”, Directorate-General for Energy, available at: https://energy.ec.europa.eu/topics/infrastructure/european-grids_en
5. European Commission, Framework for State Aid measures to support the Clean Industrial Deal (Clean Industrial Deal State Aid Framework), C/2025/3602, OJ C, available at: https://eur-lex.europa.eu/eli/C/2025/3602/oj/eng
6. Compass Lexecon, Towards a regional approach for capacity remuneration mechanisms, discussion paper prepared for Eurelectric, 2025.