On 21 November 2006, a new mechanism known as market coupling (or implicit auctions) was adopted to allocate daily capacities on the France-Belgium and Belgium-Netherlands interconnections by simultaneous use of the three countries’ market order books, replacing the previous system of explicit auctions.
Market coupling is a mechanism used to integrate electricity markets in different physical areas while requiring minimal changes to the local arrangements. Market coupling replaces a two-step process: a daily explicit auction of transmission capacity followed by the day-ahead energy markets. Market coupling integrates transmission allocations and energy trading, removing many of the inefficiencies at the day-ahead stage.
The European market integration started with the Trilateral Market Coupling (TLC) in 2006 when the markets of the Netherlands, Belgium and France were connected. The European electricity market integration was taken further when a Memorandum of Understanding (MoU) between governments, regulators, power exchanges, TSOs and the electricity associations of Belgium, Luxembourg, the Netherlands, Germany and France was signed in Luxembourg in June 2007. The MoU agreed on the implementation of market coupling between the involved electricity markets. From the beginning on, APX Group has strongly welcomed this development.
On 9 November 2010 the Central Western European Market Coupling (CWE) was launched, replacing the Trilateral Market Coupling. The CWE region is also linked to the EMCC coupling of Germany and Denmark through an Interim Tight Volume Coupling. The connection of NorNed to the CWE Market Coupling was introduced on 12 January 2011, linking the liquid Norwegian day-ahead market to the wider Central West European power market.
CWE Market Coupling – Implementation study
In early August 2008, the partners of the CWE Market Coupling project provided an Implementation Study to the PentaLateral Energy Forum.
This reference document describes the design of the market coupling solution that is proposed to be implemented. It is a major milestone for the project.
An addendum to the implementation study will be provided by the end of November concerning specific aspects (e.g. the Shipping Agent description, the sharing of congestion revenue, the description of ATC, a new data bottom-up budget/planning).
Please follow the links below to download the Implementation study, as well as its appendices:
- Implementation Study
- Annex 1 – List of Questions
- Annex 2 – Consultation Results
- Annex 3.1 – Validators Report
- Annex 3.2 – Validators Report
- Annex 3.3 – Validators Report
- Annex 4 – Fall Back Options
- Annex 5 – Algorithm Requirements
CWE Market Coupling – Addendum to Implementation Study
In November 2008, the partners of the CWE Market Coupling project have provided the addendum to the Implementation Study addressed to the PentaLateral Energy Forum. This document completes the description of the design of the market coupling solution that was proposed in the Implementation Study, published on 1 October 2008.
This addendum contains the:
- Distribution of the auction incomes in ATC based Market Coupling
- Methodology of a coordinated ATC calculation
- Results of the latest validation study
- Bottom-up planning and budget
The first goal is the launch of an ATC-based market coupling for the CWE region, as soon as possible, currently planned for September 2010. Flow based Market Coupling remains the ultimate goal. After a time of parallel running of simulations in flow-based coupling there is going to be a consultation before the switch to a flow-based coupling. Please follow links below to download the addendum to the Implementation Study and its annex, as well as the presentation of the addendum proposed to the Pentalateral Energy Forum on 26 November 2008.
COSMOS description – CWE Market Coupling algorithm
The CWE project parties have selected COSMOS as the algorithm to calculate daily market coupling results. COSMOS is a branch-and-bound algorithm designed, in collaboration with N-SIDE, to solve the problem of coupling spot markets including block orders. It treats all technical and product requirements set by the CWE project, including step and interpolated orders, flow-based network under PTDF representation, ATC links and DC cables (possible with ramping, tariffs and losses), profiles block orders, flexible blocks orders and linked block orders.
COSMOS outputs net export positions and prices on each market and each hour, the set of executed orders, and the congestion prices on each tight network element. These outputs satisfy all requirements of a feasible solution, including congestion price properties and the absence of Paradoxically Accepted Blocks.
The document below only describes the features that will be used once CWE Market Coupling is launched, though COSMOS already integrates many additional features such as those to be expected in a context of product and geographic extensions.