Integrated European markets help to improve the stability of the Polish power system, allowing electricity to be imported in times of deficit and exported in times of surplus, as long as there is an opportunity to sell or buy additional electricity in other power systems in the European Union. The pan-European extent of market mechanisms allows the use of resources to be optimised throughout the European Union, lowering the cost of energy supply and improving its security and reliability.

PSE’s involvement in the areas mentioned includes implementation and development activities at the European, regional and local levels. Coordination of activities aimed in particular at ensuring that the required business capabilities in the area of market coupling is achieved in a timely manner takes place within the framework of a dedicated business task set up in the company and carried out by subject-matter staff supported by an organisational and competence team appointed for this purpose. This way, in addition to the ongoing tasks in the area of market coupling, competences are being built in our organisation to enable smooth implementation of changes in the future.

Single day-ahead and intra-day markets are operated by Nominated Energy Market Operators (NEMOs) with TSO participation and allow energy to be exchanged in the wholesale market up to one hour in advance. From the perspective of the Polish bidding zone, the implementation of SDAC and SIDC take place using a model that allows the operation of multiple NEMOs, implemented under the Multi NEMO Arrangements (MNA) project. In Poland, the MNA model was implemented on 9 February 2021. The intention behind the activities of multiple NEMOs is to increase the competitiveness of services in the energy market. Currently, the operation of the MNA is coordinated by the PL OPSCOM operating committee, in which the PSE has a leading role.

The coupling of balancing markets is organised exclusively by the TSO, with timeframes of 30 minutes to a few seconds before real time, and is intended to cover imbalance that the wholesale market has failed to do and that results from unexpected events and forecast errors. For more information on the single day-ahead and intra-day markets and balancing markets, see below.

SDAC

SDAC is a central segment of the European electricity market model. It is a mechanism whereby exchange prices for each bidding zone in Europe can be calculated in a coordinated manner, in a common process, with a single computational point. Capacity allocation is based on the price difference between bidding zones. Thus, it is an implicit type od auction, where market participants do not reserve transmission capacity for the purposes of their cross-border transactions but only to buy/sell energy in the market to which they are geographically assigned. Transmission capacity allocation through the MC mechanism takes place automatically, in the course of energy trading in a manner that maximises the total market surplus.

The implementation of SDAC began in February 2014 with the participation of the following countries: Belgium, Denmark, Estonia, Finland, France, Spain, the Netherlands, Lithuania, Luxembourg, Latvia, Germany/Austria, Norway, Poland (via SwePol Link), Portugal, Sweden and the United Kingdom. In May 2014, a connection was commissioned between the NWE and SWE regions – the so-called MRC (Multi Regional Coupling). In subsequent years, SDAC’s coverage was gradually expanded. From Poland’s perspective, the most important SDAC development activities took place on:

• 17 June 2021 – a launch of the Interim Market Coupling (ICP) connecting the day-ahead capacity markets in Poland and 4MMC countries (Czech Republic, Slovakia, Hungary, Romania) with Europe’s largest MRC market by introducing implicit capacity allocations on six borders (PL-DE, PL-CZ, PL-SK, CZ-DE, CZ-AT, HU-AT). The Interim MC project did not introduce any changes to the manner of determining cross-zonal transmission capacities, which were still determined using the NTC (Net Transfer Capacity) method, but changed their allocation method. The ICP project has led to the implementation of SDAC almost all over Europe, through the introduction of a single common auction on the power exchanges for market participants in all countries covered by the MRC and 4M MC areas. Thanks to the ICP project, Poland was fully integrated through the European day-ahead market coupling mechanism.
• 8 June 2022 – launch of the target single day-ahead market coupling mechanism in the Core Region on the basis of Flow-Based Allocation (FBA) method. FBA is a capacity calculation method based on physical flows throughout the region. It allows grid technical constraints to be taken into account during the process of capacity calculation and allocation for commercial exchange. With this method, the interdependencies between commercial exchange transactions at each bidding zone border and power flows in the interconnected power system are taken into account.

Fig. 1. SDAC overage area
Source: Market Coupling Project

SIDC

SIDC is a mechanism for single intra-day coupling mechanism with European coverage through which market participants carry out transactions of purchase and sale of electricity up to 1 hour before the period of its physical delivery. Energy trading within SIDC is carried out in two modes:

• continuous mode, whereby which bids from all bidding zones covered by the mechanism are matched in a simultaneous iterative process, within the available transmission capacity. Allocating transmission capacity for the purposes of commercial transactions is performed in the background of the transactions concluded. The ability to adjust a trading position at a short notice is of particular importance for entities managing portfolios characterised by high volatility of demand and generation, e.g. RES;
• auction mode, whereby bids from all bidding zones not covered by the mechanism are matched in the Intra-Day Auction (IDA) process, in which prices are set for individual bidding zones as the basis for determining the congestion rent for each border.

In both of the above-mentioned modes, implicit allocation is performed.

The launch of SIDC operating in a continuous trading mode (implemented using the XBID platform) took place on 12 June 2018. The Polish market area has been operating under SIDC since 19 November 2019. Initially, the SIDC mechanism covered four Polish borders (CZ-PL, DE-PL, LT-PL, PL-SE). As of 29 November 2022, the Slovakian bidding zone joined SIDC, which enabled the PL-SK border to be also covered by the mechanism, which will make it possible to phase-out the temporary Intra-Day Market solution used on this border so far, based on the explicit auction mechanism. The evolution of coupling individual bidding zines to the SIDC mechanism is shown in Fig. 2.

Fig. 2. Evolution of coupling individual bidding zones to the SIDC mechanism
Source: Market Coupling Project

The launch of the auction part of SIDC took place on 13 June 2024. The first day-ahead auctions were then held. The auction part of SIDC consists of 3 IDA auctions:

• IDA1 – auction conducted at 15:00 hours on day D-1, providing results for the entire day D,
• IDA2 – auction conducted at 22:00 hours on day D-1, providing results for the entire day D,
• IDA3 – auction conducted at 10:00 hours on day D, providing results for the timeframe between 12:00 and 24:00 hours of day D.

As of 14 June 2024, simultaneously with the launch of the second stage of the balancing market reform, 15-minute trading products (15-minute Market Time Units - MTUs) available under the SIDC mechanism were implemented in the Polish bidding zone. In the first stage, the use of 15 min. MTU is possible for transactions within the Polish bidding zone. A total of 15 MTUs are planned to be made available in 2025 for cross-border transactions.

Operational and development activities relating to SDAC and SIDC

Activities currently underway in the SDAC and SIDC areas are aimed at ensuring proper operational performance and proper development. Our company is involved in European and local initiatives through participation in steering committees and expert groups responsible for the day-to-day operation and development of SDAC and SIDC. Major development initiatives include:

• in the SDAC area:
  • implementation of 15-minute market products (Day-Ahead 15 min MTU),
  • designing and implementing a solution for co-optimising energy and reserve trading;
• in the SIDC area:
  • finalisation, in all bidding zones covered by the mechanism, of the implementation of 15-minute market products (Intra-Day 15 min MTU);
  • designing and implementing a solution to enable SIDC transactions to be concluded up to 30 min before the physical delivery period (30 min Intra-Day Gate Closure Time – IDGCT);
  • implementation of the FBA method as the target solution for SIDC.

The implementation of the FBA method in SIDC will be preceded by several phases of Intra-Day Capacity Calculation (IDCC) implementation, whereby NTC capacity for each border will be separated from the Flow-Based domain designated for the Intra-Day market.

Stages of IDCC implementation:

• stage 1/IDCC(b) (capacity calculated on day D-1; 22:00) – implemented on 28 May 2024;
• stage 2/IDCC(a) (capacity calculated on day D-1; 15:00 – “DA leftovers”) – implemented on 13 June 2024;
• stage 3/IDCC(c) (capacity calculated on day D; 4:00) – scheduled for implementation in Q1 2025;
• stage 4/IDCC(d) (capacity calculated on day D; 10:00) – scheduled for implementation in Q1 2026;
• stage 5/IDCC(e) (capacity calculated on day D; 16:00) – scheduled for implementation in Q1 2027.

Regulation provides for integration of the European balancing market through the implementation of four platforms:

1. European platform for the exchange of balancing energy from replacement reserves (RR)

• Required activation time: 30 minutes.
• Implemented under the TERRE project launched on 15 January 2020.
• The go-live of the TERRE platform took place on 15 January 2020.
• Due to the amendment to Regulation (EU) 2019/943 changing the SIDC gate closure time to 30 minutes before real time from 1 January 2026, the project will be closed by the end of 2025.

2. European platform for the exchange of balancing energy from frequency restoration reserves with manual activation (mFRR)

• Required activation time: 15 minutes.
• Implemented under the MARI project.
• The go-live of the MARI platform was completed in October 2022.

3. European platform for the exchange of balancing energy from frequency restoration reserves with automatic activation (aFRR)

• Activation via an automatic controller in up to 5 minutes.
• Implemented under the PICASSO project.
• The go-live of the PICASSO platform took place in June 2022.

4. European platform for the imbalance netting process

• Based on avoiding the activation of balancing energy from automatic reserves in opposite directions by neighbouring TSOs.
• Implemented under the IGCC project (operating in Germany and the neighbouring countries).
• The European go-live of the IGCC platform took place in June 2021.

Our organisation actively participates in all implementation projects of European balancing platforms. As part of our work at ENTSO-E, PSE participates in the preparation of detailed methodologies required by the EBGL Regulation. Since February 2020, our organisation has been operationally active in the IGCC project. Connection to balancing platforms is planned for 2025.

Fig. 3. Overview of European balancing energy exchange platforms (source: ENTSO-E)