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Electricity markets couple

MARKET coupling was successfully launched on September 11 to handle the allocation of the daily cross-border electricity and transmission capacities in and between the Czech, Slovak and Hungarian market areas through a price coupling mechanism. This method allows simultaneous use of the order books of the three countries’ day-ahead electricity markets, including available daily cross-border capacities on both the Czech-Slovak and Slovak-Hungarian borders. The current two-step process on the Slovak-Hungarian border – daily explicit cross-border capacity auctions followed by trading of power on local exchanges – were thus replaced by the simpler and more efficient process of market coupling, Slovak grid operator SEPS reported on its website.

MARKET coupling was successfully launched on September 11 to handle the allocation of the daily cross-border electricity and transmission capacities in and between the Czech, Slovak and Hungarian market areas through a price coupling mechanism. This method allows simultaneous use of the order books of the three countries’ day-ahead electricity markets, including available daily cross-border capacities on both the Czech-Slovak and Slovak-Hungarian borders. The current two-step process on the Slovak-Hungarian border – daily explicit cross-border capacity auctions followed by trading of power on local exchanges – were thus replaced by the simpler and more efficient process of market coupling, Slovak grid operator SEPS reported on its website.

The main advantage of the new mechanism is its higher efficiency in utilising cross-border capacities resulting from the implicit allocation system and a one-step approach. The better utilisation of cross-border capacities and the ease of daily export-import opportunities will ensure better
portfolio optimisation opportunities, SEPS wrote.

The three coupled markets together represent a scale of volume that creates greater overall security of supply, higher liquidity and thus less price volatility on the coupled markets. The market coupling results are published on the website of the power exchanges.

Following a memorandum of understanding signed by the Czech, Slovak and Hungarian authorities on May 30, 2011, the project was adopted by the local power exchanges (OTE, OKTE and HUPX) and transmission system operators (CEPS, SEPS and MAVIR) on the basis of institutional support given by ministries and national energy regulators.

The introduced system of implicit allocation uses a price coupling mechanism compatible with an algorithm used in the Central Western European region.

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