Fundamentals

1. Introduction Electricity auction markets follow established economic models for price formation, where prices are determined by the interaction of supply and demand. These principles are applied in real-time to determine market-clearing prices and volumes in the electricity market. In each auction, market participants submit bids to buy or sell electricity at different prices. The […]

1. Introduction Aggregated supply and demand curves provide a direct visualization of how electricity prices are determined in auction-based power markets. These curves effectively represent the Merit Order in practice, illustrating how supply and demand interact to establish the market price. By analyzing aggregated curves, we can better understand the current market. 2. General Concept

1. Introduction The Spot market with short term physical delivery consists of two markets with fundamentally different market designs:Auction-based trading, including the Day-Ahead auction and Intraday auctions.Continuous Intraday trading, where orders are matched in real time until shortly before delivery.The following post will be about the auction based trading, focusing on the Day-Ahead auction. 2.

1. Introduction Electricity is a unique commodity as it must be produced and consumed in real-time. This requires a sophisticated market structure to ensure continuous balance. Over time, various market mechanisms have been developed to manage electricity trading, optimize dispatch, and ensure system stability. 2. Liberalization and Creation of Markets Monopolies At the beginning of

1. Introduction The Merit Order is a fundamental concept in electricity market economics, determining how electricity generation is dispatched and priced. Once mostly used by industry professionals, the term gained broader attention during the energy crisis in 2021 and 2022 as the answer to rising electricity prices. The Merit Order model is a great, intuitive