Single day-ahead coupling (SDAC)
European Union Electricity Market Glossary

 


 

Single day-ahead coupling (SDAC) is a coordinated electricity price setting and cross-zonal capacity allocation mechanism, which simultaneously matches orders from the day-ahead markets per bidding zone, respecting cross-zonal capacity and allocation constraints between bidding zones.

 

According to Article 2(26) of the Regulation establishing a Guideline on Capacity Allocation and Congestion Management - CACM (Regulation on market coupling) ‘single day-ahead coupling’ means the auctioning process where collected orders are matched and cross-zonal capacity is allocated simultaneously for different bidding zones in the day-ahead market.

 

Single day-ahead market coupling is envisaged to be applied throughout the EU and Norway. 

  

As of November 2017 single day-ahead market coupling was used with respect to 30 out of the 42 EU borders, i.e. Austria, Belgium, the Czech Republic, Germany, Denmark, Estonia, Spain, Finland, France, Hungary, Italy, Lithuania, Latvia, the Netherlands, Norway, Poland, Portugal, Romania, Sweden, Slovenia, Slovakia and Great Britain (Annex 2 to the European Commission Third Report of 24 November 2017 on the State of the Energy Union).

 

Remaining EU borders were still applying explicit day-ahead auctions.

 

 

Maximum and minimum clearing price limits for single day-ahead coupling

 

 

Decision of the Agency for the Cooperation of Energy Regulators No 04/2017 of 14 November 2017 on the Nominated Electricity Market Operators proposal for harmonised maximum and minimum clearing prices for single day-ahead coupling

 

Annex I - Harmonised maximum and minimum clearing prices for single day-ahead coupling in accordance with Article 41(1) of Commission Regulation (EU) 2015/1222 of 24 July 2015 establishing a guideline on capacity allocation and congestion management (CACM Regulation)

 

Article 3
Harmonised maximum and minimum clearing prices for SDAC

 

1. The harmonised maximum clearing price for SDAC shall be +3000 EUR/MWh.

 

2. The harmonised minimum clearing price for SDAC shall be -500 EUR/MWh.

 

Article 4
Criteria and process for establishing and amending maximum price for SDAC

 

1. The harmonised maximum clearing price for SDAC in accordance with Article (0), shall be amended according to the following rules:

 

a) the harmonised maximum clearing price for SDAC shall be increased by 1,000 EUR/MWh in the event that the clearing price exceeds a value of 60 percent of the harmonised maximum clearing price for SDAC in at least one market time unit in a day in an individual bidding zone or in multiple bidding zones;

 

b) the increased harmonised maximum clearing price, set according to subparagraph (a), shall apply in all bidding zones which participate in SDAC from five weeks after the day in which the event referred to therein has taken place;

 

c) notwithstanding subparagraph (b), for the further application of the amendment criterion defined in subparagraph (a), the increased harmonised maximum clearing price, set according to subparagraph (a), is used from the day following the one in which the event referred to therein has taken place; and

 

d) the bidding zones referred to in subparagraph (b) are only those bidding zones with cleared buy and sell volumes and those part of the SDAC (excluding market time units where the given bidding zone(s) has been decoupled).

 

2. The NEMOs shall transparently announce and publish the amended harmonised maximum clearing price for SDAC at least four weeks before its implementation and application in SDAC.

 

3. The NEMOs shall, at least every two years, reassess the HMMCP, share this assessment with all market participants and consult it in relevant stakeholder forums organised in accordance with Article 11 of the CACM Regulation. A reassessment may also follow any amendment in accordance with paragraph (1), if the NEMOs deem it appropriate.

 

 

For the purposes of setting the clearing price limits for single day-ahead coupling the following definitions are used:

 

1. ‘harmonised maximum clearing price for SDAC’ means the maximum clearing price value which is applied in all bidding zones which participate in SDAC; and

 

2. ‘harmonised minimum clearing price for SDAC’ means the minimum clearing price value which is applied in all bidding zones which participate in SDAC.

 

The harmonised maximum clearing price limit for SDAC was proposed by Nominated Electricity Market Operators (NEMOs) to be set at +3000.00 Euro/MWh, while the respective harmonised minimum clearing price limit was proposed at -500.00 Euro/MWh (All NEMO’s proposal for harmonised maximum and minimum clearing prices for Single Day Ahead Coupling in accordance with Articles 41(1) of Commission Regulation (EU) 2015/1222 of July 2015 establishing a guideline on capacity allocation and congestion management, 14 February 2017).

 

Overall, the were three options considered for the harmonised maximum clearing price limit for SDAC:

 

- Option 1: 3000 EUR/MWh,


- Option 2: 5000 EUR/MWh,


- Option 3: 9999 EUR/MWh.

 

At least one national regulatory authority opposed to the value of 3000 EUR/MWh arguing that it will give insufficient incentive for a well functioning energy only market and proposed a value of 5000 EUR/MWh instead.

 

However, the stakeholders also argued that a higher harmonised maximum clearing price for SDAC may have an impact on the collaterals required for participation in the SDAC (see the reasons to the ACER’s Decision No 04/2017).

 

The opinions were also voiced that in case of increasing the maximum price above 3000 EUR/MWh it would be to risky to trade if errors or other unforeseeable events occur.

 

Such high maximum price would induce, moreover, excessive risks for market participants, which do not possess a large perimeter of flexible assets that can be activated to compensate any imbalance.

 

In turn, ACER considered it necessary:

 

1. to implement a more dynamic automatic adjustment rule for maximum clearing prices for Single Day Ahead Coupling (PmaxDA), such that it allows for a faster alignment of the PmaxDA towards the Value of Lost Load (VoLL);


2. to introduce an automatic adjustment rule for maximum and minimum clearing prices for Single Intra Day Coupling (PmaxID), such that PmaxID is always equal or higher than PmaxDA (ACER's Consultation document, of 24 August 2017, Maximum and minimum clearing prices for single day-ahead and intraday coupling (PC_2017_E_02)).

 

In line with the above insight ACER, moreover, proposed the new text in point 5.2 of the Harmonised maximum and minimum clearing prices for SDAC as follows:

 

"The Harmonised Maximum Clearing Price Limit shall be increased by an increment of 1000 €/MWh in the event the hourly Clearing Price in an individual or multiple Bidding Zones has exceeded a value of 60 percent of the Maximum Clearing Price Limit in at least one market time unit."

 

Finally, ACER in Article 3 of the Annex I to the Decision No 04/2017 of 14 November 2017 determined following harmonised clearing prices for SDAC:

 

1. The harmonised maximum clearing price for SDAC shall be +3000 EUR/MWh,

 

2. The harmonised minimum clearing price for SDAC shall be -500 EUR/MWh.

 

In addition, in Article 4 of the said Annex ACER envisaged the automatic adjustment mechanism, which stipulates the criteria and process for establishing and amending maximum price for SDAC (see the box).

 

In particular, the harmonised maximum clearing price for SDAC is to be increased by 1,000 EUR/MWh in the event that the clearing price exceeds a value of 60 percent of the harmonised maximum clearing price for SDAC in at least one market time unit in a day in an individual bidding zone or in multiple bidding zones.

 

The above increased harmonised maximum clearing price applies in all bidding zones, which participate in SDAC, from five weeks after the day, in which the respective event has taken place.

 

In the reasons to the above Decision 04/2017 ACER explained that the the main purpose of the requirement to take into account an estimation of the VoLL is that the harmonised maximum price for SDAC shall never restrict the free price formation.

 

Therefore, the automatic adjustment mechanism should ensure that the harmonised maximum price for SDAC be always above the clearing price that would occur in the absence of price limits or in the case of price limits equal to the VOLL.

 

It is the ACER’s view that additional, national price limits imposed on the market participants bidding prices should be removed or all at least aligned with the harmonised maximum and minimum clearing prices for SDAC established in the above ACER’s Decision 04/2017.

 

In order to avoid strategic bidding between different market time horizons and consider decreasing flexibility of generation units due to technical restrictions, the clearing price limit for the intraday day market should always be higher than day-ahead (ENTSO—E‘s stance quoted in the Annex II to the said ACER’s Decision 04/2017 -Evaluation of responses to the Public consultation on the proposal on harmonised maximum and minimum clearing prices).

 

 

Extra-EU issues

 

 

Single day ahead coupling may be opened to market operators and TSOs operating in Switzerland on the condition that the Swiss national law implements the main provisions of EU electricity market legislation and that there is an intergovernmental agreement on electricity cooperation between the EU and Switzerland (Annual Report of the ACER and CEER on the Results of Monitoring the Internal Electricity and Gas Markets in 2016 (Electricity Wholesale Markets Volume) published in October 2017, p. 43). 

 

 

Legal framework for the single day-ahead market coupling

 

 

Detailed rules for the single day-ahead market coupling are stipulated in Articles 38 - 50, Article 68 and Recital 29 of the Regulation establishing a Guideline on Capacity Allocation and Congestion Management - CACM (Regulation on market coupling) - see box.

 

 

 

Regulation establishing a Guideline on Capacity Allocation and Congestion Management - CACM (Regulation on market coupling)

 

CHAPTER 5
Single day-ahead coupling


Section 1
The price coupling algorithm


Article 38
Objectives of the price coupling algorithm


1.   The price coupling algorithm shall produce the results set out in Article 39(2), in a manner which:


(a) aims at maximising economic surplus for single day-ahead coupling for the price-coupled region for the next trading day;


(b) uses the marginal pricing principle according to which all accepted bids will have the same price per bidding zone per market time unit;


(c) facilitates efficient price formation;


(d) respects cross-zonal capacity and allocation constraints;


(e) is repeatable and scalable.


2.   The price coupling algorithm shall be developed in such a way that it would be possible to apply it to a larger or smaller number of bidding zones.


Article 39
Inputs and results of the price coupling algorithm


1.   In order to produce results, the price coupling algorithm shall use:


(a) allocation constraints established in accordance with Article 23(3);


(b) cross-zonal capacity results validated in accordance with Article 30;


(c) orders submitted in accordance with Article 40.


2.   The price coupling algorithm shall produce at least the following results simultaneously for each market time unit:


(a) a single clearing price for each bidding zone and market time unit in EUR/MWh;


(b) a single net position for each bidding zone and each market time unit;


(c) the information which enables the execution status of orders to be determined.


3.   All NEMOs shall ensure the accuracy and efficiency of results produced by the single price coupling algorithm.


4.   All TSOs shall verify that the results of the price coupling algorithm are consistent with cross-zonal capacity and allocation constraints.


Article 40
Products accommodated


1.   No later than 18 months after the entry into force of this Regulation NEMOs shall submit a joint proposal concerning products that can be taken into account in the single day-ahead coupling. NEMOs shall ensure that orders resulting from these products submitted to the price coupling algorithm are expressed in euros and make reference to the market time.


2.   All NEMOs shall ensure that the price coupling algorithm is able to accommodate orders resulting from these products covering one market time unit and multiple market time units.


3.   By two years after the entry into force of this Regulation and in every second subsequent year, all NEMOs shall consult, in accordance with Article 12:


(a) market participants, to ensure that available products reflect their needs;


(b) all TSOs, to ensure products take due account of operational security;


(c) all regulatory authorities, to ensure that the available products comply with the objectives of this Regulation.


4.   All NEMOs shall amend the products if needed pursuant to the results of the consultation referred to in paragraph 3.


Article 41
Maximum and minimum prices


1.   By 18 months after the entry into force of this Regulation, all NEMOs shall, in cooperation with the relevant TSOs, develop a proposal on harmonised maximum and minimum clearing prices to be applied in all bidding zones which participate in single day-ahead coupling. The proposal shall take into account an estimation of the value of lost load.
The proposal shall be subject to consultation in accordance with Article 12.


2.   All NEMOs shall submit the proposal to the regulatory authorities for approval.
Where a Member State has provided that an authority other than the national regulatory authority has the power to approve maximum and minimum clearing prices at the national level, the regulatory authority shall consult the proposal with the relevant authority as regards its impact on national markets.
After receiving a decision for approval from all regulatory authorities, all NEMOs shall inform the concerned TSOs of that decision without undue delay.


Article 42
Pricing of day-ahead cross-zonal capacity


1.   The day-ahead cross-zonal capacity charge shall reflect market congestion and shall amount to the difference between the corresponding day-ahead clearing prices of the relevant bidding zones.


2.   No charges, such as imbalance fees or additional fees, shall be applied to day-ahead cross-zonal capacity except for the pricing in accordance with paragraph 1.


Article 43
Methodology for calculating scheduled exchanges resulting from single day-ahead coupling


1.   By 16 months after the entry into force of this Regulation, TSOs which intend to calculate scheduled exchanges resulting from single day-ahead coupling shall develop a proposal for a common methodology for this calculation. The proposal shall be subject to consultation in accordance with Article 12.


2.   The methodology shall describe the calculation and shall list the information which shall be provided by the relevant NEMOs to the scheduled exchange calculator established in accordance with Article 8(2)(g) and the time limits for delivering this information. The time limit for delivering information shall be no later than 15.30 market time day-ahead.


3.   The calculation shall be based on net positions for each market time unit.


4.   No later than two years after the approval by the regulatory authorities of the concerned region of the proposal referred to in paragraph 1, TSOs applying scheduled exchanges shall review the methodology. Thereafter, if requested by the competent regulatory authorities, the methodology shall be reviewed every two years.


Article 44
Establishment of fallback procedures


By 16 months after the entry into force of this Regulation, each TSO, in coordination with all the other TSOs in the capacity calculation region, shall develop a proposal for robust and timely fallback procedures to ensure efficient, transparent and non-discriminatory capacity allocation in the event that the single day-ahead coupling process is unable to produce results.
The proposal for the establishment of fallback procedures shall be subject to consultation in accordance with Article 12.


Article 45
Arrangements concerning more than one NEMO in one bidding zone and for interconnectors which are not operated by certified TSOs


1.   TSOs in bidding zones where more than one NEMO is designated and/or offers trading services, or where interconnectors which are not operated by TSOs certified according to Article 3 of Regulation (EC) No 714/2009 exist, shall develop a proposal for cross-zonal capacity allocation and other necessary arrangements for such bidding zones in cooperation with concerned TSOs, NEMOs and operators of interconnectors who are not certified as TSOs to ensure that the relevant NEMOs and interconnectors provide the necessary data and financial coverage for such arrangements. These arrangements must allow additional TSOs and NEMOs to join these arrangements.


2.   The proposal shall be submitted to the relevant national regulatory authorities for approval within 4 months after more than one NEMO has been designated and/or allowed to offer trading services in a bidding zone or if a new interconnector is not operated by a certified TSO. For existing interconnectors which are not operated by certified TSOs the proposal shall be submitted within four months after entry into force of this Regulation.


Section 2
The single day-ahead coupling process


Article 46
Provision of input data


1.   Each coordinated capacity calculator shall ensure that cross-zonal capacity and allocation constraints shall be provided to relevant NEMOs in time to ensure the publication of cross-zonal capacity and of allocation constraints to the market no later than 11.00 market time day-ahead.


2.   If a coordinated capacity calculator is unable to provide for cross-zonal capacity and allocation constraints one hour prior to the day-ahead market gate closure time, that coordinated capacity calculator shall notify the relevant NEMOs. These NEMOs shall immediately publish a notice for market participants.
In such cases, cross-zonal capacity and allocation constraints shall be provided by the coordinated capacity calculator no later than 30 minutes before the day-ahead market gate closure time.


Article 47
Operation of single day-ahead coupling


1.   The day-ahead market gate opening time shall be at the latest 11:00 market time day-ahead.


2.   The day-ahead market gate closure time in each bidding zone shall be noon market time day-ahead. TSOs or NEMOs in the region based on the CEE region or its neighbouring countries may set a different gate closure time until this region has joined single day-ahead coupling.


3.   Market participants shall submit all orders to the relevant NEMOs before day-ahead market gate closure time, in accordance with Articles 39 and 40.


4.   Each NEMO shall submit the orders received in accordance with paragraph 3 to perform the MCO functions in accordance with Article 7(2) by no later than a time specified by all NEMOs in the proposal for a single price coupling algorithm set out in Article 37(5).


5.   Orders matched in single day-ahead coupling shall be considered firm.


6.   MCO functions shall ensure anonymity of submitted orders.


Article 48
Delivery of results


1.   No later than by the time specified by all TSOs in the requirements set out in Article 37(1)(a), all NEMOs performing MCO functions shall deliver the single day-ahead coupling results:


(a) to all TSOs, all coordinated capacity calculators and all NEMOs, for the results specified in Article 39(2)(a) and (b);


(b) to all NEMOs, for the results specified in Article 39(2)(c).


2.   Each TSO shall verify that the single day-ahead coupling results of the price coupling algorithm referred to in Article 39(2)(b) have been calculated in accordance with the allocation constraints and validated cross-zonal capacity.


3.   Each NEMO shall verify that the single day-ahead coupling results of the price coupling algorithm referred to in Article 39(2)(c) have been calculated in accordance with the orders.


4.   Each NEMO shall inform market participants on the execution status of their orders without unjustifiable delay.


Article 49
Calculation of scheduled exchanges resulting from single day-ahead coupling


1.   Each scheduled exchange calculator shall calculate scheduled exchanges between bidding zones for each market time unit in accordance with the methodology established in Article 43.


2.   Each scheduled exchange calculator shall notify relevant NEMOs, central counter parties, shipping agents and TSOs of the agreed scheduled exchanges.


Article 50
Initiation of fallback procedures


1.   In the event that all NEMOs performing MCO functions are unable to deliver part or all of the results of the price coupling algorithm by the time specified in Article 37(1)(a), the fallback procedures established in accordance with Article 44 shall apply.


2.   In cases where there is a risk that all NEMOs performing MCO functions are unable to deliver part or all of the results within the deadline, all NEMOs shall notify all TSOs as soon as the risk is identified. All NEMOs performing MCO functions shall immediately publish a notice to market participants that fallback procedures may be applied.

 

CHAPTER 7
Clearing and settlement for single day-ahead and intraday coupling

 

Article 68

Clearing and settlement

 

1. The central counter parties shall ensure clearing and settlement of all matched orders in a timely manner. The central counter parties shall act as the counter party to market participants for all their trades with regard to the financial rights and obligations arising from these trades.


2. Each central counter party shall maintain anonymity between market participants.


3. Central counter parties shall act as counter party to each other for the exchange of energy between bidding zones with regard to the financial rights and obligations arising from these energy exchanges.


4. Such exchanges shall take into account:


(a) net positions produced in accordance with Articles 39(2)(b) and 52(1)(b);


(b) scheduled exchanges calculated in accordance with Articles 49 and 61.


5. Each central counter party shall ensure that for each market time unit:


(a) across all bidding zones, taking into account, where appropriate, allocation constraints, there are no deviations between the sum of energy transferred out of all surplus bidding zones and the sum of energy transferred into all deficit bidding zones;


(b) electricity exports and electricity imports between bidding zones equal each other, with any deviations resulting only from considerations of allocation constraints, where appropriate.


6. Notwithstanding paragraph 3, a shipping agent may act as a counter party between different central counter parties for the exchange of energy, if the parties concerned conclude a specific agreement to that effect. If no agreement is reached, the shipping arrangement shall be decided by the regulatory authorities responsible for the bidding zones between which the clearing and settlement of the exchange of energy is needed.


7. All central counter parties or shipping agents shall collect congestion incomes arising from the single day-ahead coupling specified in Articles 46 to 48 and from the single intraday coupling specified in Articles 58 to 60.


8. All central counter parties or shipping agents shall ensure that collected congestion incomes are transferred to the TSOs no later than two weeks after the date of settlement.


9. If the timing of payments is not harmonised between two bidding zones, the Member States concerned shall ensure that an entity is appointed to manage the timing mismatch and to bear the relevant costs.

 

Recital 29


Single day-ahead and intraday coupling require the introduction of harmonised maximum and minimum clearing prices that contribute to the strengthening of investment conditions for secure capacity and long-term security of supply both within and between Member States.

 

 

 

 

 

 

IMG 0744

    Documentation    

 

 

 

 

Regulation establishing a Guideline on Capacity Allocation and Congestion Management - CACM (Regulation on market coupling), Articles 38 - 50, Article 68, Recital 29

 

Decision of the Agency for the Cooperation of Energy Regulators No 04/2017 of 14 November 2017 on the Nominated Electricity Market Operators proposal for harmonised maximum and minimum clearing prices for single day-ahead coupling

 

Annex I - Harmonised maximum and minimum clearing prices for single day-ahead coupling in accordance with Article 41(1) of Commission Regulation (EU) 2015/1222 of 24 July 2015 establishing a guideline on capacity allocation and congestion management (CACM Regulation), 14 November 2017

 

Annex II - Evaluation of responses to the, Public consultation on the proposal on harmonised maximum and minimum clearing pricesPublic consultation on the proposal on harmonised maximum and minimum clearing prices

 

Maximum and minimum clearing prices for single day-ahead and intraday coupling, ACER's Consultation document, PC_2017_E_02, 24 August 2017

 

All NEMO’s proposal for harmonised maximum and minimum clearing prices for Single Day Ahead Coupling in accordance with Articles 41(1) of Commission Regulation (EU) 2015/1222 of July 2015 establishing a guideline on capacity allocation and congestion management, 14 February 2017

 

All NEMOs’ proposal for products that can be taken into account by NEMOs in single day-ahead coupling process in accordance with Article 40 of Commission Regulation (EU) 2015/1222 of 24 July 2015 establishing a guideline on capacity allocation and congestion management, 14 February 2017

 

 

 

 

 

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Last Updated on Friday, 08 December 2017 11:39
 

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