Major milestones for the intraday markets

This month, we celebrated major milestones in the projects we have been involved in. First, on 28th May, the Flow-Based Intraday Market Coupling went live for the TSOs in the Core region, which encompasses over 20 organisations in 13 European countries. Then, on 13th June, another milestone was completed: the implementation of the Intraday Auctions by the Nominated Electricity Market Operators (NEMOs) and Transmission System Operators (TSOs) from across Europe. Why are Intraday Auctions key to more robust energy systems in the EU?

What is the background of this?

Historically, intraday markets were locally based with limited volumes. With more renewable energy sources coming onto the grid, known for their intermittent production, there’s an increased need for intraday markets that cross borders. In 2014 and 2018, two market mechanisms were introduced to make electricity trading across European electricity regions (the so-called bidding zone borders) possible: Single Day-Ahead Coupling (SDAC) and Single Intraday Coupling (SIDC) projects. In 2018, the first cross-border intraday (XBID) continuous trading went live and in 2022 the SIDC project with the XBID platform was organised under the Market Coupling Steering Committee (MCSC) and celebrated the 4th go-live wave with Greece and Slovakia joining the intraday market coupling. Now, with the Intraday Auctions, a new and major step has been taken.

What is so special about Intraday Auctions?

Intraday Auctions provide the ability to accumulate offers and efficiently allocate the scarce transmission capacity in an increasingly important intraday market. Moreover, this mechanism ensures a complete price signal in the intraday timeframe. Trading closer to real-time allows market parties to avoid imbalances, which (potentially) leads to lower balancing costs for TSOs. It also supports further integration of renewable energy sources; shorter trading periods are better suited to the forecasting and volatility associated with renewable sources.

What has changed?

Before, the capacities provided by TSOs in SIDC were allocated based on the first-come-first-served principle. As soon as there was a buy-and-sell order match, the trade was executed. The downside of this method is its inability to price intraday cross-border capacities to reflect its scarcity, which leads to congestion. With Intraday Auctions, there are now implicit auctions within the SIDC framework, where collected orders are matched and cross-zonal capacity is allocated simultaneously for different bidding zones. This leads to the cross-zonal capacity allocation being more efficient and adequate price signals being sent to the market in case congestion occurs. This means that the cross-zonal capacity is no longer seen simply as a free residue, but as an integral product of cross-border trading in the intraday timeframe. A lot of work has been done to make this possible, on a technical, design, and operational level in four central, three regional, and several local IT systems of participating NEMOs and TSOs, involving 40 parties and over 80 local IT systems. A major milestone indeed!

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