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 more efficient utilization of 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 and thereby maximizing social welfare.

SDAC is an initiative of 17 Nominated Electricity Market Operators (‘NEMOs’) and 34 Transmission System Operators (‘TSOs’) which – in the framework of CACM implementation – enables cross-border trading across Europe via implicit auctions for the delivery of power for the following day.

SDAC relies on the Price Coupling of Regions (‘PCR’) solution developed and managed by a group of 9 power exchanges. PCR is open to other European power exchanges that would wish to join. More detailed information can be found in the following presentations.

• PCR prezentation.pdf
• PCR Standard Presentation.pdf

PCR is based on three main principles – single algorithm, robust operation and individual power exchange accountability.

• The common algorithm enables fair and transparent pricing of day-ahead electricity prices and net positions of bidding areas across Europe. The algorithm takes into account the specific features of the various European power markets and aims to optimize the overall welfare and increase transparency.
• The PCR process is based on decentralized data sharing and provides a robust and resilient operation.
• The PCR Matcher and Broker service enable the exchange of anonymized orders and electricity network constraints among power exchanges in order to calculate bidding zone prices as well as other reference prices and net positions of all included bidding areas.

The project is recognized within the approved MCO plan (more information in the All NEMO Cooperation section) as a default solution for the implementation of the SDAC. The solution is currently also planned to be used for the implementation of intraday auctions.

In December 2020, the MRC coupling was successfully extended to Greece via the HDVC interconnector between Greece and Italy.

Until June 2021, the implementation of CACM consisted of two parallel and equal market coupling projects: the Multi-Regional Coupling (‘MRC’) and the 4M Market Coupling (‘4M MC’). The two regions have been fully coupled since June 17, 2021, thus completing the DE-AT-PL-4M MC project, also known as the Interim Coupling Project (‘ICP’).

In 2022, flow-based implicit allocation will be introduced via the Core Flow-Based Market Coupling project (‘Core FB MC’) as the target solution for SDAC required by the CACM Regulation.

Picture 1 – SDAC members following June 17, 2021 (available on the NEMO Committee website here)

How SDAC works

Day-ahead market coupling requires processing input data from all involved NEMOs and TSOs (essentially bids, offers, network capacities and constraints), matching them by using the single algorithm, and finally validating and sending outputs (such as matched trades, clearing prices, and scheduled exchanges) back to NEMOs and TSOs. These procedures follow precise and tight time schedules, in order to ensure optimal economic solutions, high performance and robustness.

The SDAC uses a common price coupling algorithm called PCR EUPHEMIA to calculate electricity prices across Europe and implicitly allocate cross-border capacity.

More information on the PCR EUPHEMIA computational algorithm can be found here.

SDAC market information

The statistical data are presented in the following points:

• 95 % of EU consumption is coupled.
• 500 TWh / year is coupled in one market solution.
• €200m is the average daily value of matched trades.
• 12 minutes are needed to solve a large and complex optimization problem.

Future development

PCR EUPHEMIA is largely compliant with CACM requirements and the final target is to complete SDAC and ensure full CACM compliance. Furthermore, PCR EUPHEMIA as an “existing solution” has also been proposed in the context of Single Intraday Coupling for the execution of intraday auctions for the pricing of cross-border capacity (IDAs). More information on the project can be found here.

PCR EUPHEMIA is continually updated and developed in order to support further extensions of the market Coupling and ensure a higher quality of performance. The main aspects of algorithm development include the following:

• geographical extensions and market growth,
• switch from NTC to Flow-Based capacity calculation
• multi-NEMOs per bidding zone,
• CACM requirements to the Algorithm (adequate performance, scalability and repeatability),
• new NEMOs’ and new TSOs’ requirements,
• topology changes.

The research and development (R&D) program, called Euphemia-Lab, is a joint initiative of NEMOs and TSOs with periodic reporting to regulatory institutions and stakeholders. The program consists of researching a list of potential solutions to improve the target KPIs. Priority is given to improving CACM requirements and the most problematic root causes of EUPHEMIA’s numerical problems. It is to be noted that research of a single topic takes at least 6 months and subsequent integration into production takes at least one year.