The electricity market is structured into a Day-ahead market, an Intraday auction market and an Intraday continuous market

 

 

Day-ahead market

As an integral part of the electrical energy production market, the day-ahead market, also called single day-ahead coupling (SDAC), aims to carry out electrical energy transactions by submitting selling and takeover bids for electrical energy on behalf of the market agents for the twenty-four hours of the following day. This market, coupled with Europe since 2014, is one of the crucial pieces in achieving the objective of the European Internal Energy Market.

Every day of the year at 12:00 CET is the day-ahead market session where prices and electrical energies are set for all across Europe for the twenty-four hours of the next day. The price and volume of energy at a specific hour are established by where supply and demand intersect, following the model agreed upon and approved by all of the European markets that is currently applied in Spain, Portugal, Germany, Austria, Belgium, Bulgaria, Croatia, Slovakia, Slovenia, Estonia, France, Holland, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Finland, Sweden, Denmark, Norway, Poland, the United Kingdom, the Czech Republic, and Romania.

The buying and selling agents that are found in Spain or Portugal will present their bids to the day-ahead market through OMIE, which is the only NEMO in those countries. Their buying and selling bids are accepted based on their economic merit and depending on the available capacity for interconnection between price zones. If, at a certain time of day, the capacity for interconnection between two zones is sufficient to allow the flow of electricity resulting from negotiation, the price of electricity at that time will be the same in both zones. If, on the other hand, interconnection at that time is maxed out, at that moment the algorithm for setting prices results in a different price in each zone. The mechanism described for setting electricity prices is called market coupling.

The results from the day-ahead market, based on free contracting between buying and selling agents, represent the most efficient solution from an economic point of view, but given electricity's characteristics, it is also necessary for it to be viable from a physical point of view. As such, once these results are obtained, they are sent to the System Operator for validation with perspective on their technical viability. This process is known as managing the system's technical limitations and ensures that the market results can be technically accommodated on the transportation network. As such, results from the day-ahead market may be altered slightly as a result of the analysis of technical limitations done by the System Operator, giving rise to a viable daily program.

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Intraday markets

The intraday markets are an important tool that allows market agents to adjust the day-ahead market's resulting schedule by submitting selling and takeover bids for energy,  according to expected needs in real-time.

The intraday markets are currently structured into six bidding sessions in MIBEL's scope and a continuous cross-border European market, and they are carried out once the system operator has made the necessary adjustments after the day-ahead market so that the resulting schedule may be viable.

Just like the day-ahead market, once these markets are done, the results are sent to system operators so that they can schedule the balancing processes.

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The intraday auction market is currently structured into six sessions with programming horizons for each session, and it manages Portugal and Spain's price zones and the free capacity of interconnections: Spain-Portugal, Spain-Morocco, and Spain-Andorra, where the volume of energy and the price per hour are determined by the intersection of supply and demand.

 

The intraday auction market aims to attend to adjustments to the Definitive Viable Day-Ahead Schedule, whose programming basis is the result of the day-ahead market, by submitting selling and takeover bids for electrical energy on behalf of market agents.

 

As with the day-ahead market, intraday auctions follow the marginal pricing model and the market coupling model for the borders that it manages.

 

The intraday auction market is currently structured into six sessions with the following hourly distribution per session:

 

hourly distribution per session

Like the intraday auction market, the intraday continuous market, also called single intraday coupling (SIDC), gives market agents the change to manage their energy  imbalances with two fundamental differences with regard to the auction:

 

  • In addition to gaining access to market liquidity at the local level, agents can benefit from the liquidity available in markets in other areas of Europe, given that cross-border transportation capacity is available between the zones.
  • The adjustment can be made up to one hour before the moment of delivery.

 

The purpose of this market is to facilitate the trade of energy between different areas of Europe continuously and to increase the global efficiency of transactions on the intraday markets across Europe.

 

The opening of the negotiation of all contracts of the intraday continuous market for the next day (D + 1), in the price areas of Spain and Portugal will be made after the end of the first auction of the current day (D) , provided  the system operator has published the Definitive Viable Daily-ahead Schedule for the following day (D + 1) previosly. The following table shows by day, period and time the contracts in negotiation.

 

Rounds

 

2.1 The intraday auction market

The intraday auction market is currently structured into six sessions with programming horizons for each session, and it manages Portugal and Spain's price zones and the free capacity of interconnections: Spain-Portugal, Spain-Morocco, and Spain-Andorra, where the volume of energy and the price per hour are determined by the intersection of supply and demand.

 

The intraday auction market aims to attend to adjustments to the Definitive Viable Day-Ahead Schedule, whose programming basis is the result of the day-ahead market, by submitting selling and takeover bids for electrical energy on behalf of market agents.

 

As with the day-ahead market, intraday auctions follow the marginal pricing model and the market coupling model for the borders that it manages.

 

The intraday auction market is currently structured into six sessions with the following hourly distribution per session:

 

hourly distribution per session

2.2 Intraday continuous market

Like the intraday auction market, the intraday continuous market, also called single intraday coupling (SIDC), gives market agents the change to manage their energy  imbalances with two fundamental differences with regard to the auction:

 

  • In addition to gaining access to market liquidity at the local level, agents can benefit from the liquidity available in markets in other areas of Europe, given that cross-border transportation capacity is available between the zones.
  • The adjustment can be made up to one hour before the moment of delivery.

 

The purpose of this market is to facilitate the trade of energy between different areas of Europe continuously and to increase the global efficiency of transactions on the intraday markets across Europe.

 

The opening of the negotiation of all contracts of the intraday continuous market for the next day (D + 1), in the price areas of Spain and Portugal will be made after the end of the first auction of the current day (D) , provided  the system operator has published the Definitive Viable Daily-ahead Schedule for the following day (D + 1) previosly. The following table shows by day, period and time the contracts in negotiation.

 

Rounds