emcc: Glossary

Cross-border power flow in the “wrong” direction, i.e. from the high price area to the low price area. This may happen under certain circumstances, e.g. in case of curtailment.

Available Transfer Capacity (ATC) is a measure of the transfer capability remaining in the transmission network or on a specific interconnector for further commercial activity over and above already committed uses. It is thus the part of the NTC (Net Transfer Capacity) that remains available after each phase of the allocation procedure for further commercial activity.

Market coupling on the Danish-German border is based on ATCs, taking volumes purchased in explicit auctions into account.

The auction trading system denotes a trading system, where the price is set by calculating the intersection between the supply curve (constructed on the basis of all the sale offers) and the demand curve (constructed on the basis of all the purchase bids).

Energy account which the TSO keeps for every user of the system for every quarter of an hour, in which the feeding into the systems, withdrawals and the transfer of energy to other balance areas (schedule) are booked in order to establish the deviation in the energy balance of every trading participant for every quarter of an hour.

When a participant sends his bids/offers, the participant must specify in which bidding area he wants to trade. For example, a participant may send bids/offers specifying that these bids/offers refer to Eastern Denmark.

Normally, Norway is divided into a number of different bidding areas. For the time being, the areas Germany, Finland, Sweden, Eastern Denmark and Western Denmark each constitute one bidding area.

A block sales offer is an offer, where the seller states he wants to sell a given volume during some specified hours, if the average price during these hours is above a certain limit. The seller will either sell the whole volume or nothing. Compare single-hour bid.

Example: During the four hours from 7 am to 11 am, I will sell 200 MWh per hour if the average price is 30 EUR/MWh or higher.

A block purchase bid is a bid, where the buyer states he wants to buy a given volume during some specified hours, if the average price during these hours is below a certain limit. The buyer will either buy the whole volume or nothing.

Example: During the five hours from 4 pm to 9 pm I will buy 100 MWh per hour if the average price is 20 EUR/MWh or lower.

A block bid is the common term for block sales offers and block purchase bids.

In case of extreme prices on Nord Pool Spot, some block bids are converted into single hour bids in case they would not be executed otherwise. The conversion of a block bid on the supply side in a situation of undersupply will reduce – or even help to avoid – the need of curtailment on the purchase side.

If required, the EMCC system can also activate block bid conversion so that converted block bids will result in an hourly bid curve. 

The selection of block bids in the market coupling calculation is rather complex as many different types of block bids are traded on the exchanges.

The EMCC IT-system uses an algorithm which combines linear and quadratic optimisation principles. In case a block bid is incompatible with the calculated price, it is excluded. This is done until all block bids and flexible block bids are in line with price and volume criteria and the economic optimum is found.

The term congestion is used to denote situations in which the demand for power transmission exceeds the capabilities of the transmission network, i.e. in which the utilization of the network would lead to a violation of network security limits. In its broadest sense, the term “congestion management” comprises all actions and measures that are applied to handle a network access in the presence of congestion.

Cross-border energy flow is the flow on power lines connecting two neighbouring bidding areas. Hence, the “border” need not be a border between two countries, it may also be a border between two bidding areas inside a country.

Curtailment means a reduction in the scheduled capacity or energy delivery. This sometimes happens in the Danish market, for example, when there is a danger of oversupply. Curtailment of bids at NPS will take place in the situation where the aggregated supply and bid curve within a price area do not intersect. This may be the case in an area where there is significant over supply or under supply.

In order to settle the price in an area with over supply it is necessary to curtail the sales bids so that the supply curve intersects with the demand curve at minimum price, which is currently € -200.

Central Western Europe (France, Germany, Belgium, Luxemburg, the Netherlands)

Direct current.

European Market Coupling Company.

The region covered by the energy exchanges participating in the EMCC market coupling.

Traders buy capacity between areas and decide the daily use. The auctions of power and capacity are independent from each other; they are not coordinated into one activity.

A future is a financial contract which is settled daily from the day of the purchase/sell. 
A forward is a financial or physical contract which is settled daily from the beginning of the delivery period

The common term for market splitting and market coupling. The auctions of power and capacity are coordinated into one activity.

Used for single-hour bids.

Example: Suppose a player has sent the following single-hour bids for the hour between 8 am and 9 am: At the price 20 EUR/MWh, I will buy 400 MWh. At the price 30 EUR/MWh, I will buy 200 MWh.

If the price during this hour turns out to be 25 EUR/MWh, the player has bought 300 MWh.

When one company manages the cross-border flow between two or more separate price areas that are operated by two different power exchanges with non-harmonised rules.

When one power exchange manages the cross-border flow between two or more separate bidding areas. A price area may consist of one or more bidding areas with one common price.

Market coupling order. After the market coupling calculation, EMCC sends its MCo to the power exchanges.

The Net Transfer Capacity is the maximum total exchange capacity between two adjacent balance areas. The NTC must be compatible with applicable security standards, taking into account the technical uncertainties of future network conditions.

Order book. Order books from power exchanges contain all bids and offers from market participants for the day-ahead. For the market coupling calculation, the exchanges send anonymous order books to EMCC.

On a DC link connecting two bidding areas, the TSOs may specify a ramping constraint.

Assume the trading capacity on a north-south link is 1,000 MW and assume the TSOs for this link has set a ramping constraint of 600 MW. This means the energy flow between the two bidding areas connected by the link cannot shift with more than 600 MW from one hour to the next. Assume the prices at the outset suggest a northbound energy flow of 1,000 MW during hour 8 and a southbound energy flow of 1,000 MW during hour 9. The price signal thus suggests a energy flow shift of 2,000 MW between hour 8 and hour 9.

In this case, the market coupling algorithm has to reduce the capacity utilised so it is less than 1,000 MW.

In order to comply with the ramping constraint, the algorithm may even be forced to send energy in the direction of the low-price area during some hours.

A schedule is an instruction to a TSO to book power between two balance areas. The physical delivery of hourly and block contracts are fulfilled by reporting schedules to the TSOs.

A purchase bid or a sales offer where the player states he wants to trade during a given hour. Compare block bid and linear interpolation.

Example 1: For the hour between 10 am and 11 am, I want to buy 20 MWh, if the price is between the minimum price and 25 EUR/MWh.

Example 2: For the hour between 6 pm and 7 pm, I want to sell 30 MWh, if the price is between 35 EUR/MWh and the maximum price.

On the spot market, transactions are settled immediately, for example for the day ahead. See also "futures market vs. forward market".

The transmission system transmits power from power plants to the subordinate distribution system. The transmission system usually has a voltage of 220 or 380 kV. The transmission systems of single European countries are connected, however, the cross-border capacities are to be extended.

Transmission System Operator. A transmission system operator (TSO) is an company that is responsible for operating, maintaining and developing the transmission system for a balance area / control area and its interconnections