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SDAC

The aim of Single Day-ahead Coupling ('SDAC') is to create a single pan-European cross-zonal day-ahead electricity market. An integrated day-ahead market will increase the overall efficiency of trading by promoting competition, increasing liquidity and enabling more efficient utilisation of generation resources across Europe.

SDAC allocates scarce cross-border transmission capacity in the most efficient way by coupling wholesale electricity markets from different regions through a common algorithm while taking into account cross-border transmission constraints, thereby maximising social welfare.

SDAC is an initiative of Nominated Electricity Market Operators ('NEMOs') and  Transmission System Operators ('TSOs') which – in the framework of CACM implementation – enables cross-border trading across Europe via implicit auctions for delivery of power for the following day.

The project relies on the Price Coupling of Regions ('PCR') solution developed and managed by a group of power exchanges. PCR is open to any other European power exchange that wishes to join. More detailed information can be found in the following presentations:


PCR is based on three main principles – a single algorithm, robust operation, and individual power exchange accountability.

  • The common algorithm gives a fair and transparent determination of day-ahead electricity prices and a net position of a bidding area across Europe. The algorithm is developed respecting the specific features of the various European power markets. It leads to optimisation of the overall welfare and increase of transparency.
  • The PCR process is based on decentralised sharing of data, providing a robust and resilient operation.
  • The PCR Matcher and Broker service enable the exchange of anonymised orders and electricity network constrains among the power exchanges to calculate bidding zone prices and other reference prices and net positions of all included bidding areas.

The project is recognized within the approved MCO plan (more information can be found in the All NEMO Cooperation section) as a default solution for the implementation of SDAC. The solution is currently also planned to be used for the implementation of intraday auctions.

At this stage, SDAC is in an interim phase during which two parallel market couplings co-exist, i.e. the Multi-Regional Coupling ('MRC') and the 4M Market Coupling ('4M MC'). These couplings are considered equal and are jointly forming, for this interim period, the Single Day-Ahead Coupling in implementation of CACM. In the enduring stage of the CACM Regulation implementation, MRC and 4M MC shall be coupled.

It is foreseen that the specific market coupling of the 4M MC, Poland and the MRC will be accomplished by introducing NTC-based implicit allocation on 6 borders (PL-DE, PL-CZ, PL-SK, CZ-DE, CZ-AT, and HU-AT) through DE-AT-PL-4M MC project and then by introducing Flow-Based implicit allocation through Core Flow-Based Market Coupling project ('Core FB MC') as the target solution for SDAC required by the CACM Regulation.

Furthermore, by the end of 2020, the MRC coupling shall be extended to Greece via the HDVC interconnector between Italy and Greece.

 

Market_Coupling_projects_in_Europe.png

Picture 1 – Market Coupling projects in Europe

 

How SDAC works

Day-ahead market coupling requires processing input from all involved NEMOs and TSOs (essentially bids and offers and network capacities and constraints), matching them by operating one single algorithm, and lastly validating and sending outputs, such as matched trades, clearing prices, and scheduled exchanges, to NEMOs and TSOs. These procedures occur within precise and tight timelines while ensuring optimal economic solutions, high performance, and robustness.

SDAC makes use of a common price coupling algorithm, called PCR EUPHEMIA, to calculate electricity prices across Europe and to implicitly allocate auction-based cross-border capacity. Both MRC and 4M MC use PCR EUPHEMIA that will also be the IT asset for the execution of market coupling following the merger of the two abovementioned projects.

More information on PCR EUPHEMIA computational algorithm can be found under this link.

 

SDAC market information (MRC and 4M MC)

The statistical data are presented in the following points:

  • 95% of EU consumption is coupled.
  • 1,500 TWh / year is coupled in one market solution.
  • €200M on average is a daily value of matched trades.
  • 12 minutes are needed to solve a large and complex optimization problem.

 

Future Development

PCR EUPHEMIA is largely compliant with CACM requirements and the final target is to complete SDAC and ensure full CACM compliance. Furthermore, PCR EUPHEMIA as an “existing solution” has also been proposed in the context of Single Intra-day Coupling for the execution of intraday auctions for the pricing of cross-border capacity ('IDAs'). More information on the project can be found here.

PCR EUPHEMIA is continually updated and developed in order to support further extensions of the market coupling and higher quality of performance. The main aspects of algorithm development include the following:

  • geographical extensions and market growth,
  • switch from NTC to Flow-Based capacity calculation,
  • multi-NEMOs per bidding zone,
  • CACM requirements to the Algorithm (adequate performance, scalability and repeatability),
  • new NEMOs’ and new TSOs’ requirements, and
  • topology changes.

The research and development ('R&D') programme, called Euphemia-Lab, has already been initiated. The R&D programme is a joint approach of NEMOs and TSOs with periodic reporting to regulatory institutions and stakeholders. Priority is given to improve CACM requirements and the most problematic root cause of the numerical problems in EUPHEMIA. It is to be noted that research of a topic takes at least 6 months and subsequent integration into production takes at least one year.