Traders Push for Longer Transmission Rights and Quarterly Products on Italy-France Power Corridor
A traders' group says the Italy-France interconnector remains too illiquid to hedge effectively, and wants longer-dated capacity rights and broader market access.
A traders' group on Friday (2026-08-07) called for deeper structural changes to the futures power market on the Italy-France corridor, saying current arrangements leave market participants with inadequate tools to manage cross-border price risk. The group's demands include longer-term transmission rights, quarterly products, and expanded access to cross-border capacity.5
The Italy-France interconnector is one of Europe's most commercially active power links, connecting two markets that frequently diverge sharply on price. French power day-ahead was quoted at €100.82/MWh at Saturday's (2026-08-08) close. When French supply tightens — typically during nuclear output reductions — prices on both sides of the border can spike and diverge, leaving traders exposed if they lack hedging instruments across longer time horizons.5
The liquidity problem the traders describe is not new, but their call for quarterly products reflects a specific gap: most available hedging products on that corridor have not matched the tenors that large industrial consumers and utilities need to lock in costs meaningfully in advance. Without longer-dated instruments, buyers and sellers are forced to roll short-dated positions repeatedly, accumulating transaction costs and basis risk.5
Cross-border capacity access compounds this. Transmission rights between Italy and France are allocated through auction mechanisms, and traders argue that the process currently restricts who can participate and how far ahead they can secure capacity. Broadening access would, in theory, allow more participants to hedge across the border and deepen the market's ability to absorb large positions without undue price impact.5
The call comes against a backdrop of ongoing friction in French power markets. French TSO RTE has faced separate criticism from traders for issuing large retroactive corrections to balancing market prices and volumes, with participants across Europe reporting unexpected financial losses as a result, according to Montel reporting. That dispute points to a wider concern: the French power market's operational reliability has not kept pace with the commercial complexity traders are trying to manage.2
Separately, the French parliament passed legislation late on Wednesday (2026-06-17) requiring EDF to sell 6 GW of virtual hydropower capacity to alternative suppliers via auction, as part of a European Commission deal that avoids opening concessions. French suppliers subsequently called for those auction products to include intraday market access, arguing the instruments on offer do not reflect the actual flexibility hydropower can provide.4
That debate over hydro auction design connects to the Italy-France hedging problem. Italy imports meaningfully from France, and French hydropower output is a key variable in determining how much capacity is available for cross-border flows. If French suppliers cannot efficiently monetise hydro flexibility intraday, that constrains the supply signal that Italian importers are trying to hedge against.4
Elsewhere in southern Europe, analysts cited by Montel noted in May (2026-05-21) that improved hydropower availability and advance gas purchasing by regional producers had shielded southeast European markets from the worst of the current price environment. Italy and France did not enter this period with the same cushion. Both countries carry debt-to-GDP ratios above 100%, according to The Economist, limiting fiscal headroom for energy support schemes even as they have committed substantial sums — France among the nations adding an estimated €30bn to €75bn in prior crisis-era commitments.1,3
None of that fiscal pressure directly resolves the hedging gap the traders are flagging. Regulatory and market design changes on transmission rights and product tenors require action from network operators, regulators, and potentially the European Commission — a process that can take years rather than months. In the meantime, participants on the Italy-France corridor are managing price risk with instruments they themselves describe as insufficient.5
The next concrete signal will be how European energy regulators or the relevant transmission system operators formally engage with the traders' group's proposals, and how the design of EDF's forthcoming hydropower auctions evolves in response to supplier pressure for intraday access. If those auctions launch without flexibility provisions, the gap in cross-border hedging tools is likely to persist well into next year.4,5