Explainer

What is 15-minute Market Time Unit?

In the strategic integration of European electricity markets, the launch of the 15-minute Market Time Unit (15minMTU) is a key milestone. What exactly is it? Why is it such a major milestone in the renewable energy integration? And how will Europe’s electricity markets be affected by it? Magnus Energy's Kotaro Kuribayashi breaks it down for you.

Europe’s ambition to further integrate renewable energy

Did you know that in 2023, renewable energy accounted for 24.5% of total energy consumption in Europe? And this proportion is expected to rise significantly. The EU directive 2023/2413 sets an ambitious target for renewable energy to constitute 42.5% of total energy consumption by 2030. Naturally, this has numerous benefits, such as reduced environmental impact and energy security through diminishing reliance on imported fossil fuels. However, the increased exposure to the inherently volatile generation patterns of renewable energy sources, such as wind and solar, also calls for improved strategies to maintain balance in the grids.

Role of the 15minMTU in future-proofing Europe’s electricity market

Volatile generation patterns of renewable energy can be mitigated through increasing the granularity of electricity trading, or in other words, shortening the time interval for which electricity can be priced and traded. Until recently, these time intervals, known as Market Time Unit (MTU), were 60 minutes on most European borders in both the Day-ahead and Intraday Electricity Markets. However, 15-minute MTU has been introduced in the Core and Nordics regions’ Intraday markets. Soon, the Day-Ahead Electricity market, Europe’s most liquid energy market, will implement this shorter MTU too.

For the market, smaller trading intervals allow market participants to better reflect the forecasted generation and consumption of electricity into their buy/sell positions. Being able to do so already in the day-ahead market means market participants are less reliant on readjusting their positions in the intraday market. Such efficient trading is expected to increase economic welfare both for producers and consumers. For the grid, efficient market behaviour is expected to reduce imbalances between electricity supply and demand, resulting in less costs for balancing services. Thereby, the implementation of 15minMTU makes the European electricity market future-proof to support the further integration of renewable energy sources into the grid.

Regulatory background of the 15-minute Market Time Unit

The switch to 15minMTU is being pushed by European regulation. Firstly, Article 8(4) of Regulation (EU) 2019/943 mandates that by 1 January 2021, the Imbalance Settlement Period (ISP) across Europe must be 15 minutes in all scheduling areas, subject to specific derogations or exemptions granted by regulatory authorities. These exemptions are permissible only until 31 December 2024, post which full compliance is expected across all member states.

Secondly, Article 8(2) of the same regulation requires that nominated Electricity Market Operators (NEMOs) provide market participants the opportunity to trade energy in intervals that are at least as short as the ISP for both day-ahead and intraday markets. This alignment is crucial for creating a more responsive and fluid market structure that can quickly adapt to changes in supply and demand dynamics.