Nord Pool Spot manages the capacity on the interconnectors between the Nordic countries and the cables that connect the bidding areas in Norway. Nord Pool Spot uses the capacity for conducting power into high price areas and conducting power out of low price areas. Thereby, the price in high price areas is reduced whereas the price in low price areas is raised.

This principle is right for society: the commodity ought to move towards the high price. This system also causes no market participant to be assigned privileges on any bottleneck, which is an important feature of a liberalised market. A privilege on a bottleneck could be abused by a commercial participant and it is thefore essential that the capacity is given to a neutral party.

Two commercial participants separated by a bottleneck in the grid cannot trade physical kWh with each other. This is impossible because the capacity of the bottleneck is given to the power exchange. Consequently, the two participants cannot exchange kWh across the bottleneck.

How do two participants like that then trade with each another? The answer is that they make a financial contract. The two participants trade the physical kWh with the exchange or a local market participant. Later, they settle with each other in accordance with the financial contract. The idea of this principle is as follows: kWh are always procurable. They can for example be bought via Elspot. What is interesting is, therefore, not to procure kWh, but only the price. However by means of a financial contract, the price is fixed.

Participants who are not separated by any bottlenecks may also deal in physical kWh with each other. The exchange has no monopoly.