Navigating Near Real-Time Energy Trade Markets and the Dynamics of Intraday Auctions
Nord Pool and EPEX SPOT have announced plans to introduce Intraday Auctions to their energy trading markets in mid-2024. There will be three auctions per day. Initially, these auctions will be at 15:00 CET and 22:00 CET for the entire next day, followed by the final auction at 10:00 for the remaining half of the current day. The bidding time resolution will be 15 minutes in most countries (AT, BE, DE, DK1-DK2, FI, NL, SE1-SE4), 30 minutes in France, and 60 minutes in Norway, Poland, and the Baltic countries.
To succeed in the Intraday Auctions market, the bidding process needs to be automated and streamlined, and trade results must be calculated and allocated automatically to the assets and other trading positions. Given that continuous Intraday Trading stops during each auction process, time consumed in results handling is crucial, and the automated trading platform must empower traders to restart continuous trading quickly.
The good news for the growing community of Hansen Trade customers is that we are all set to support this new market service upon its introduction. Hansen Trade’s module is a fully automated solution for bidding and trade result handling in the intraday energy auction market. It provides trade results separately for each asset and other trading positions, and this capability enables traders to participate fully in the continuous trading market with up-to-date data. Additionally, Hansen Trade delivers comprehensive monitoring and validation tools, ensuring trading is reliable, deterministic, and conducted with high levels of transparency and visibility.
Learn more about our Intraday Auctions module and the full range of Hansen Trade’s capabilities.
THE DETAIL
In the increasingly dynamic landscape of the energy sector, the spotlight often focuses on long-term forecasts and day-ahead trading. However, the intraday market plays a vital role in maintaining power system balance and flexibility. Unsurprisingly, the major European power exchanges have announced plans to introduce Intraday Auctions to complement their existing continuous Intraday Trading and Day-Ahead Trading markets. In this blog, we explore the main aspects of Intraday Auctions, shedding light on their unique role in the electricity marketplace.
Intraday markets provide a unique platform for energy market participants to trade electricity in the immediate run-up to when it must be delivered. Intraday markets complement Day-Ahead by meeting near-term fluctuations in supply and demand.
Combined with continuous Intraday Trading, Intraday Auctions are used in the energy markets to address short-term imbalances between electricity supply and demand. However, while Intraday Trading is a continuous process where market participants actively trade energy throughout the day, Intraday Auctions are scheduled events designed to match buying and selling interests at specific intervals efficiently; they empower larger but fewer transactions relative to continuous Intraday Trading.
Therefore, while the primary objective of continuous Intraday Trading is to optimise energy portfolios, balance supply and demand, and respond to unforeseen changes in factors like weather, demand patterns, or equipment failures, Intraday Auctions seek to establish a market trading equilibrium in the short term. These auctions help manage imbalances in the power system by allowing market participants to adjust their positions based on updated information, especially when imbalance volumes are large and without the complication of multiple continuous Intraday Trading transactions.
In practical terms, Intraday Auctions operate at specific times during the day when energy market participants submit bids to buy or sell electricity, providing a mechanism for correcting imbalance positions and optimising flexible assets. Auctions are relatively short-lived and allow for quick discovery of relative trading positions.
When operating effectively, the Intraday Auction market enhances power system balance, efficient asset utilisation, and the ability to adapt to short-term volatility. By facilitating rapid adjustments to variations in supply and demand, Intraday Auctions contribute significantly to power system balance, and this capability enhances the overall resilience of the electricity grid. Additionally, Intraday Auctions promote more efficient asset utilisation by allowing market participants to optimise their positions in near real-time, and this is essential for ensuring electricity is generated and delivered cost-effectively. The real-time nature of Intraday Auctions enables the energy market to adapt swiftly to unforeseen circumstances, minimising the impact of disruptions and enhancing the overall reliability of the grid.
Key characteristics of the Intraday Auction market:
- Near Real-Time Flexibility: The intraday market provides an adjustment mechanism, allowing market players to respond swiftly to unforeseen changes such as unexpected outages, weather variations, or demand spikes. This flexibility is essential for maintaining power system balance and reliability.
- Market Dynamics: Participants in the intraday auction market include generators, suppliers, and traders looking to optimise their positions based on evolving conditions. The market-clearing process determines the equilibrium price and quantity, ensuring supply matches near real-time demand.
- Risk Management: Market participants utilise intraday auctions for risk management, allowing them to adjust their positions and defend against sudden changes. This aspect is crucial for mitigating imbalances between scheduled and actual electricity consumption or production.
- Regulatory Framework: Regulatory oversight ensures the proper functioning of intraday markets. Regulations aim to maintain market integrity, prevent market manipulation, and uphold fair trading practices, fostering participant trust.
THE CONCLUSION
Intraday auctions play a vital role in the intricate web of electricity markets, offering a responsive and flexible mechanism for market participants; they occupy a critical position in the spectrum of energy markets. As the energy landscape continues to evolve, the importance of the near real-time markets – both Day-Ahead and Intraday – in ensuring power system balance and adaptability cannot be overstated. Embracing the dynamics of Intraday Auctions is critical to navigating the challenges and opportunities presented by the ever-changing energy ecosystem.
As the demand for renewable energy grows and the power system becomes more complex, short-term flexibility in electricity trading becomes paramount. Intraday Auctions – and their ability to address immediate imbalances and respond swiftly to changing conditions – contribute significantly to the resilience and efficiency of the power system. In a world where every megawatt matters, Intraday Auctions are the heartbeat of a dynamic and responsive energy ecosystem. This market ensures that the lights stay on, the machines keep running, and the power system remains resilient despite uncertainties.
Visit Hansencx.com to learn more about our Intraday Auctions module or the full range of Hansen Trade capabilities.
Jyri Joutsi
Product Manager
Hansen Trade