Single Day-ahead Coupling (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 effective competition, increasing liquidity and enabling a more efficient utilisation of the 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, simultaneously taking into account cross-border transmission constraints thereby maximising social welfare.
SDAC is an initiative between the 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.
Significant progress has been achieved in the establishment of a pan-European Single Day-Ahead Coupling in recent years, thanks to early implementation initiatives and pilot projects. SDAC relies on the Price Coupling of Regions (PCR) solution developed by a group of power exchanges. At this stage, the 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 on an equal basis as jointly forming, for this interim period, the Single Day-Ahead Coupling in implementation of CACM. In the enduring stage MRC and 4M MC shall be coupled.
SDAC geographical scope and extensions
February: launch of the North-Western Europe (NWE) Price Coupling operating under a common day-ahead power price calculation using the PCR solution. The same solution was also used at the same time in the SWE region in a common synchronised mode. The first go-live of this coupling included the following countries: Belgium, Denmark, Estonia, Finland, France, Germany/Austria, Great Britain, Latvia, Lithuania, Luxembourg, the Netherlands, Norway, Poland (via the SwePol Link), Sweden, Portugal and Spain.
May: full coupling NWE and SWE (MRC coupling)
November: the 4M MC went live using the PCR solution. The following countries are part of the 4M MC: Czech Republic, Hungary, Romania and Slovakia.
- February: Italy and Slovenia coupled with MRC
January: Bulgaria joined MRC (isolated mode)
February: Croatia joined MRC (isolated mode)
June: Croatia coupled with MRC
October: the Single Electricity Market on the island of Ireland coupled with MRC, split of the German-Austrian bidding zone into two separate ones
It is foreseen that the next step will include coupling the 4M MC, Poland and the MRC by introducing NTC-based implicit allocation on 6 borders (PL-DE, PL-CZ, PL-SK, CZ-DE, CZ-AT, and HU-AT). The current planning envisages the go-live of the so-called Interim Coupling in Q2 2020. This is to be regarded as a stepwise transition on the afore-mentioned borders from current NTC-based explicit allocation towards the flow-based implicit allocation which is to be implemented in the framework of the Core Flow-Based Market Coupling Project as the target solution required by regulation.
Furthermore, by the end of 2020, the MRC coupling shall be extended to Greece via the HVDC interconnector between Italy and Greece.
The parties involved are:
Transmission System Operators (TSOs):
50Hertz Transmission, ADMIE, Amprion, APG, AST, BritNed, ČEPS, Creos, EirGrid, ElecLink, Elering, ELES, ELIA, Energinet, ESO, Fingrid, HOPS, Litgrid, MAVIR, Nemolink, NGIC, PSE, REE, REN, RTE, SEPS, SONI, Statnett, Svenska Kraftnät, TenneT DE, TenneT NL, Terna, Transelectrica and TransnetBW.
Nominated Electricity Market Operators (NEMOs):
BSP, CROPEX, SEMOpx (EirGrid and SONI), EPEX, EXAA, GME, HEnEx, HUPX, IBEX, Nasdaq, Nord Pool, OMIE, OKTE, OPCOM, OTE, and TGE.
The governance of the SDAC consists of three layers:
Joint NEMOs and TSOs: governed by the Single Day-Ahead Coupling Operations Agreement (DAOA);
Only NEMOs: governed by the All NEMO Day Ahead Operation Agreement (ANDOA);
Only TSOs: governed by the TSO Cooperation Agreement for Single Day-Ahead Coupling (TCDA).
Therefore, the governance structure is headed by a Joint Steering Committee (JSC) that includes representatives of all the parties involved. The JSC activities are supported by horizontal groups which address the legal, financial and communication aspects of the coupling. Furthermore, there are three joint groups which deal with the following operational aspects: Market & System Design, Procedures and Operation.
Joint NEMOs and TSOs governance structure
What does SDAC do?
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.
The 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 the MRC and the 4M MC apply PCR EUPHEMIA that will also be the IT asset for the execution of market coupling following the merge of the two abovementioned couplings.
Input data to PCR EUPHEMIA are the network capacities and constraints provided by the TSOs and the bids and offers provided by the NEMOs.
PCR EUPHEMIA matches energy demand and supply for 24 hours simultaneously. The algorithm runs a combinatorial optimization process based on (i) the modelling of the matching problem (ii) the implementation of dedicated branch-and-bound strategies and (iii) the utilization of a standard optimization solver. The code of the algorithm uses Java and is interfaced with the matching system via an Oracle database.
This process maximises social welfare (consumer surplus, supplier surplus and congestion rent) and takes into account price limits of orders and network constraints. The algorithm is designed to regard a large variety of orders and network features as well as local market rules.
Output data are clearing prices, matched trades, scheduled exchanges and the net position of bidding areas.
Since its launch PCR EUPHEMIA has been continuously developed further. The most recent major development has been the integration of multi-NEMO requirements.
95% of EU consumption is coupled
1.500 TWh / year coupled in one market solution
200 M€ average daily value of matched trades
12 minutes to solve a large and complex optimization problem
PCR EUPHEMIA is largely compliant with CACM requirements and the final target is to complete SDAC and ensure full CACM compliance. Further, PCR EUPHEMIA as an “existing solution” has been proposed in the context of Single Intraday Coupling for the execution of intraday auctions for the pricing of cross-border capacity (IDAs). Notwithstanding the important achievements of the PCR EUPHEMIA, cycles of Research and Development (R&D) are being planned in order to support further extensions of the market coupling, new market designs and higher quality of performance, such as:
Geographical extensions and market growth
Switch from NTC to flow based capacity calculation
Multi-NEMOs per bidding zone / shipping area
CACM requirements to the Algorithm (adequate performance, scalability and repeatability)
New NEMOs’ and new TSOs’ requirements
This R&D cycle, called Euphemia-Lab has already been initiated. The R&D programme is a joint approach of NEMOs and TSOs with periodic reporting to institutions and stakeholders. The R&D programme consists of researching a list of potential solutions to improve the target KPIs. 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 on a topic takes at least 6 months and subsequent integration into production takes at least one year.
- 25th October 2019 No-Deal Brexit
27th September 2019 Report on the ‘partial decoupling’ incident
Joint Steering Committee meeting minutes