Power Trading in Europe
Julien Jomaux
Power Market Expert
GEM Energy Analytics
LinkedIn
Julien Jomaux - https://gemenergyanalytics.substack.com/
About myself – Julien Jomaux
• Electromechanical engineer from UCL (Belgium).
• 10+ years of experience in the electricity sector.
• Work experience in Belgium, Rwanda, and Albania.
• Writer of a Substack on electricity and markets: GEM Energy Analytics
• Currently working as a freelance consultant. My current mission is as a
market expert (external) for the Belgian TSO – Elia (balancing markets).
Julien Jomaux - https://gemenergyanalytics.substack.com/
GEM Energy Analytics
• Personal Substack with more than
50 posts and more than 7000
subscribers.
• Currently free-of-charge.
• Focus on the energy world / power
system / electricity markets.
Julien Jomaux - https://gemenergyanalytics.substack.com/
• Part 1: Some physics on electricity
Agenda
• Part 2: The basics of power trading in Europe
• Part 3: Focus on the impact of renewables
• Part 4: New trends
• Part 5: Particular events
Julien Jomaux - https://gemenergyanalytics.substack.com/
Maintaining the equilibrium
Source
Electricity is all about timing. As electricity is not easily stored (and almost never in electric energy), the equilibrium
between the demand and the supply must be maintained at all time.
Julien Jomaux - https://gemenergyanalytics.substack.com/
The European grid: a true marvel
Julien Jomaux - https://gemenergyanalytics.substack.com/
The birth of the grid
•
In our present society, it is not imaginable to lack electricity. But it took decades for the grid to
reach every house.
•
It all started by small grids in urban centers and get interconnected more and more.
•
Interconnections were done as it increases the security of supply while decreasing the cost of
maintaining the equilibrium between the supply and demand.
The Birth
ofJomaux
the Grid
- by Brian Potter
Julien
- https://gemenergyanalytics.substack.com/
Towards a global grid ?
Global Renewable Energy Grid Project: Integrating
Renewables via HVDC and Centralized Storage
[PDF] Global Power Grids for Harnessing World Renewable Energy | Semantic Scholar
Julien Jomaux - https://gemenergyanalytics.substack.com/
Why are power markets important ? Answer from AI
1. Efficient Resource Allocation: Power markets enable the efficient distribution of electricity by matching supply with demand in real-time. Market
mechanisms help ensure that electricity is generated by the most cost-effective sources, leading to overall efficiency in the power system.
2. Price Signals: They provide price signals that reflect the marginal cost of producing electricity. This information is vital for both producers and consumers
to make informed decisions. Producers can optimize their generation based on market prices, and consumers can adjust their consumption accordingly.
3. Encouraging Investment: By providing transparent and competitive market prices, power markets create an environment that encourages investment in new
generation capacity, including renewable energy sources. This investment is essential for ensuring long-term reliability and sustainability of the power supply.
4. Promoting Competition: Power markets introduce competition among electricity generators, which can lead to lower prices and innovation. Competition
drives efficiency improvements and cost reductions, benefiting consumers with more affordable electricity.
5. Integrating Renewables: They play a key role in integrating renewable energy sources, such as wind and solar, into the grid. Power markets can facilitate the
balancing of variable renewable energy through mechanisms like ancillary services and real-time balancing markets.
6. Risk Management: Power markets allow participants to manage risks associated with price volatility through various financial instruments such as
futures, options, and forward contracts. This helps stabilize revenues for generators and costs for consumers.
7. Demand Response: They enable demand response programs wherein consumers can be incentivized to reduce or shift their electricity usage during peak times.
This helps in balancing the grid and avoiding blackouts.
8. Regulatory Transparency: Transparent market operations help regulators monitor and ensure fair practices, prevent market manipulation, and protect consumer
interests.
Julien Jomaux - https://gemenergyanalytics.substack.com/
• Part 1: Some physics on electricity
Agenda
• Part 2: The basics of power trading in Europe
• Part 3: Focus on the impact of renewables
• Part 4: New trends
• Part 5: Particular events
Julien Jomaux - https://gemenergyanalytics.substack.com/
The screens of electricity traders
Julien Jomaux - https://gemenergyanalytics.substack.com/
nanoenergies.cz
Organization of the European electricity markets
Market rules for different electricity market timeframes | www.acer.europa.eu
Different markets depending on the moment to buy compared to delivery
Julien Jomaux - https://gemenergyanalytics.substack.com/
Organization of the European electricity markets
•
Physical constraint: generation must be equal to consumption at all time.
•
The European solution?
•
Make the day-ahead market the cornerstone of this equilibrium ( main market).
•
Intraday market  possibilities to adjust positions from day-ahead to real-time.
•
Balancing markets  In real-time (and close to real-time), the TSOs are the ones managing the equilibrium.
•
•
Balancing capacity  TSOs pay a fee to be able to modify upwards and downwards.
•
Balancing energy  TSOs pay to activate the balancing capacity.
•
Imbalance price/settlement  mechanism to incentivize market parties to behave correctly.
Forward/future markets  hedging mechanisms against the day-ahead market.
Julien Jomaux - https://gemenergyanalytics.substack.com/
Organization of the European
electricity markets
•
•
Forward markets:
•
Market participants hedge the risk and/or exposure against possible price fluctuation on spot markets (i.e. day-ahead, intraday) with
the financial trade taking place up to several years before the physical delivery in a specific bidding zone.
•
Price formation is based on the expected average price of the day-ahead timeframe.
Day-ahead/intraday markets:
•
•
Market participants are settling the physical trades from one day in advance (day-ahead) up to the 30/15 minutes before delivery
(intraday).
Balancing markets:
•
If demand and supply of the market participants trading in the electricity markets do not match, the imbalance needs to be corrected by
TSOs.
•
TSOs procure balancing services (i.e. balancing capacity and energy) from market participants (with reserve-providing units/groups)
which enable the electricity transmission grid’s frequency to be maintained.
•
The procurement of balancing capacity is done in parallel to other timeframes while the procurement of balancing energy takes place
during or after the intraday timeframe (see graph on the left)
Julien Jomaux - https://gemenergyanalytics.substack.com/
Stable volume on day-ahead markets (slight uptick in 2024)
EPEX
Julien Jomaux - https://gemenergyanalytics.substack.com/
Booming intraday markets
• Booming intraday markets with
the expansion of renewables and
algorithmic trading.
• Need to have adjustments close
to real-time (day-ahead markets
are cleared up to 36 hours before
delivery).
EPEX
Julien Jomaux - https://gemenergyanalytics.substack.com/
Closer to real-time, increasing granularity and more interconnected
The most important trends in power market trading can be summarized as:
1. Closer to real-time
•
Pushing gate closure time to the latest possible. Recent example: From January 2026, the gate-closure
time for cross-border intraday trade will be pushed from 60 minutes to 30 minutes.
2. Increasing granularity
•
Trading happens increasingly in 15-minutes product and not 1h product. Recent example: the day-ahead
markets will move towards 15-min products in 2025.
3. More interconnected markets
•
An increasing amount of exchanges share a common algorithm, both in day-ahead and intraday.
•
The balancing markets are being coupled (balancing energy activations: PICASSO and MARI).
Julien Jomaux - https://gemenergyanalytics.substack.com/
Difference between auctions and continuous trading
Auction (DA and IDA)
Continuous
Orders
Collected until the gate closure time
(GTC)
Entered to the system throughout the day
(highest bid principle)
Orderbook
Blind – no visibility
Visible
Matching
Matching at once
Matching happens at all time, whenever buy
and sell orders matched
Market Price
Unique price (marginal price)
Various prices
Welfare
Optimized welfare
No welfare optimization – First come first
servce
Julien Jomaux - https://gemenergyanalytics.substack.com/
The liberalization of the Energy Markets
•
The European electricity markets used to be
vertically integrated in a single company. This
organization (or similar) is still present in many
countries around the world.
•
After the liberalization, the target model is to
introduce competition in generation/trading
and in retail (relationship with consumer). ;
•
The networks are natural monopoly and are
regulated businesses (public or privately
owned).
The European Energy Market | Definition & Development
Julien Jomaux - https://gemenergyanalytics.substack.com/
Concept of a bidding zone
•
In general, one country equals one zone,
except for notable exceptions such as Italy
and the Nordics.
•
Inside one bidding zone, it is considered as
a “copper plate” with no physical constraints.
EPEX
Julien Jomaux - https://gemenergyanalytics.substack.com/
Moving towards more zone
ACER
•
An important debate currently happening is the potential split of some
bidding zones, notably the German bidding zone. Studies are on-going
to analyze the impact of such split (as well as the selection of the split).
•
There exists already countries with more than one zone, notably the
Nordics and Italy.
•
As there is an unique price within a zone, it is assumed that there is no
physical constraint inside the zone. This is increasingly less the case,
like the North/South German divide, which lead the German TSOs to
increasingly pay for redispatching.
•
Introducing bidding zones becomes political because there is not a
single price anymore (ex: industries paying extra in the South of
Germany compared to the Northern part).
•
There is also a risk of losing liquidity in the markets, and especially in
the forward/future markets.
Julien Jomaux - https://gemenergyanalytics.substack.com/
Or even nodal like in the US?
•
In the US, they are going a step further with the
concept of nodal prices: one grid element is one
node, which can have a different real-time price of
the neighboring nodes.
•
On the map, we can wee all the considered nodes
in the US, which can be regrouped in clusters
somehow.
Gridstatus.io
Julien Jomaux - https://gemenergyanalytics.substack.com/
How to trade power?
Over-the-counter trading vs organized exchanges
•
•
nanoenergies.cz
There are mostly two categories of trading
possible: the OTC and the organized
exchange.
•
In OTC, trades are not public, market
parties organize their trade as they wish
(ex: power purchase agreement
between a producer and a buyer).
•
In exchanges, there are market rules
and clearing houses ensure market
parties against counterpart risks.
One will influence each other: if there are
more buyers at certain hours in OTC (ex: a
large number of solar PPA), then less buyers
in organized markets for these hours would
reduce in lower prices at these moments.
Julien Jomaux - https://gemenergyanalytics.substack.com/
Demand and supply curves
EPEX
•
Prices are determined by the intersection of the demand and supply curves for each MTU (Market Time Unit).
•
Currently, day-ahead prices can vary between –500 €/MWh and 4000 €/MWh.
•
Note that a large fraction of the demand (orange) is at the maximal price and a large fraction of the supply (grey line)
is a the minimal price.
Julien Jomaux - https://gemenergyanalytics.substack.com/
Continuous trading
•
Intraday auctions happen continuously.
•
Several products are available (60 min, 30
min and 15 min).
•
There are indexes to help understanding
the results:
EPEX
Julien Jomaux - https://gemenergyanalytics.substack.com/
•
Weighted average: the average of all
the trades that happened for that
specific product
•
ID1 – ID3: same as weighted average
but only 1 and 3 hours before delivery
were considered.
•
High and low: the highest and lowest
trades.
•
Last: the last trade that happened for
that specific product.
Launch of the intraday auctions
The further the auction takes place, the greater is the uncertainty risk,
especially on renewables. As the Gate Closure Time for DA is 12 AM
in D-1, forecasts must go from 12 to 36 hours in advance. Intraday
auctions reduce this time.
•
In addition to the Day-ahead auction and
the continuous intraday, 3 intraday auctions
have been launched in 2024.
•
These three ID auctions (IDA1, IDA and
IDA3) happen after the day-ahead auctions
and were created to offer a platform where
welfare is optimized, yet closer to real-time
compared to the day-ahead market.
•
IDA1 and IDA2 covers all hours of the next
day, while ID3 covers only 12 hours of the
same day.
Julien Jomaux - https://gemenergyanalytics.substack.com/
What happens if reality is different from trades?
Restoring the balance
• For each MTU (Market Time Unit - currently 15
minutes), the equilibrium between supply and
demand cannot be perfect and the TSOs must
activate balancing reserves to restore the
balance (= restore the grid frequency and the
commercial flows).
https://www.next-kraftwerke.be/
•
The TSOs procure in advance balancing
capacity and they activate it when needed.
•
The cost of activating the reserves is shared to
the market parties that are responsible for the
imbalance  concept of Balancing Responsible
Group (BRP).
•
Depending on the BRP position (short/long) in
the particular MTU), the BRP will pay/receive
the imbalance price to/from the TSO.
Julien Jomaux - https://gemenergyanalytics.substack.com/
What happens if reality is different from trades?
• The imbalance price is the price for the settlement
The concept of Imbalance Price
of the BRP imbalances.
•
Each country has its own rules for determining the
imbalance price.
•
It can either be a unique price (EU target model –
same for short/long positions) or a dual system (like
Switzerland or the Netherlands).
•
In general, the imbalance price is linked to the grid
situation (is the overall system long/short) and the
activation price of balancing reserves.
•
Elia
In some countries (like BE/NL), the BRP are legally
allowed to play with the imbalance price  they can
respond to the imbalance price to produce a
revenue. In Germany, it is currently forbidden.
Julien Jomaux - https://gemenergyanalytics.substack.com/
The balancing markets (for continental Europe)
•
Different products for different purposes:
•
FCR (Frequency Containment Reserves): automatically
activated, fast (fully active in 30s), in function of the grid
frequency.
•
aFRR (automatic Frequency Restoration Reserves): slower,
releases FCR, automatically activated based on a central
signal send by the TSOs.
•
mFRR (manual Frequency Restoration Reserves): even
slower, manually activated by the TSOs (central signal).
•
RR (Replacement Reserves)y: slowest, only exist in some
countries (ex: France).
•
There is an effort to harmonize the balancing markets but
practically, there are still important differences including in product
specification, procurement method (volumes and method),
activation strategy, etc.
•
These differences are logical with regards to the local context and
historic choices.
Julien Jomaux - https://gemenergyanalytics.substack.com/
The balancing markets
•
Same principles across Europe (under the European
rules – Electricity Balancing) but implementation vary
widely.
•
Capacity markets for FCR, aFRR, mFRR, and RR
•
Energy markets (activation) for all except FCR.
•
Generally separated for up and down regulation.
•
Prices vary widely from one country to another, as well
from one moment to another (right side: aFRR capacity
prices – Germany – monthly average in 2024).
•
Much smaller markets than energy markets.
•
Batteries are very well suited for these markets.
Julien Jomaux - https://gemenergyanalytics.substack.com/
Important initiatives for the balancing markets
•
•
PICASSO
•
Sharing the aFRR energy bids between countries / Cross-border activation.
•
Countries are in the process to join (Belgium: November 2024).
MARI
•
•
Sharing the mFRR energy bids.
Cross-border procurement of balancing capacity
•
9 countries for FCR.
•
Austria/Germany/Czech Republic for aFRR.
•
Still unclear how to do it practically as several questions are presen:
•
Procurement not harmonized in various countries (could differ
drastically).
•
Need of an agreement for the allocation of border capacity.
Julien Jomaux - https://gemenergyanalytics.substack.com/
Managing transmission constraints
Implicit vs explicit
•
•
Explicit allocation
•
For long-term transmission rights (financial and physical).
•
For day-ahead and intraday markets, for markets not coupled
implicitly (Switzerland, UK, the Western Balkans).
Implicit allocation
•
Also called market coupling.
•
Algorithm integrating transmission constraints into the
calculation of the results of day-ahead and intraday markets
(picture on the right: intraday market coupling).
Julien Jomaux - https://gemenergyanalytics.substack.com/
Managing transmission constraints
•
Zonal pricing means that we assume no constraint
within one zone (generally one country or smaller).
•
Between the zones, there are physical constraints that
have to be managed (impossible to carry out all trades).
The TSOs must determine the constraints.
•
If not all trades can be carried out, there will be a price
difference between the zones.
•
In Europe, we are increasingly moving from NTC (Net
Transfer Capacity) to Flow-based, as it allows more
trades in general.
Julien Jomaux - https://gemenergyanalytics.substack.com/
Hedging – future markets
•
The future price and the spot price will converge
at the maturity of the contract (when the product
is mature, no uncertainty, we know the price).
•
The long-term price represents the “fair market
expectation” of the underlying product.
Source
Julien Jomaux - https://gemenergyanalytics.substack.com/
Example of power futures
•
Example of the prices for one year in Germany
(Calendar 26 to Calendar 34).
•
The prices are relevant for that specific trading day and
will change according to market expectations which can
take many variables into account:
•
Price of commodities (Natural gas, coal, CO2).
•
Expected generation mix.
•
Expected demand.
•
There are only prices for all hours (baseload) or peal
load (8 AM to 8 PM).
•
Products are calendar year, quarter, month, week, days
and weekends.
Julien Jomaux - https://gemenergyanalytics.substack.com/
• Part 1: Some physics on electricity
Agenda
• Part 2: The basics of power trading in Europe
• Part 3: Focus on the impact of renewables
• Part 4: New trends
• Part 5: Particular events
Julien Jomaux - https://gemenergyanalytics.substack.com/
Solar is growing fast
Solar has been accelerating fast recently thanks to a
continuous price decrease in solar technology and the
high energy prices.
Installed peak power in the EU will be;
• Above 300 GW in 2024.
• Above 500 GW in 2027.
• About 750 GW in 2030 (EU objective).
Current average load in the EU: around 300 GW.
Julien Jomaux - https://gemenergyanalytics.substack.com/
Merit-order effect
• Every asset has its own marginal costs. Example:
• Renewables: around 0 €/MWh.
• Nuclear: generally low.
• Coal and gas: in function of the commodity price.
• The cheapest sources are selected first  an increase of low marginal cost sources make electricity prices on
the market go lower (= the merit-order effect).
Julien Jomaux - https://gemenergyanalytics.substack.com/
Focus on solar – Solar is concentrated
It is probably an underrated feature of solar but is rather concentrated, not only between day and night,
especially in Norther countries such as Germany.
Julien Jomaux - https://gemenergyanalytics.substack.com/
Focus on solar – Solar is concentrated
But less in some places
Solar is actually much less concentrated in Southern
places.
•
Both countries have already today moments when
solar is covering 80% or more of the load.
•
Only around 7% of the quarter-hours (15 minutes)
have had at least 50% of solar covering the load
in Germany, while it is 19% for Spain (blue line
below).
•
Only 16% of the quarter-hours in 2024 where
solar covers at least a third of the load in
Germany, while it is 30% in Spain.
Julien Jomaux - https://gemenergyanalytics.substack.com/
The concept of residual load
The concept of residual load is important to
understand the impact of renewables on prices.
The residual load is the load minus the generation
from wind and solar. It means what is the load that
must be serve by all the other capacity.
In general, there is a clear link between the residual
load and the market prices. This is especially true for
countries that are larger compared to their neighbors
(less influenced by neighboring countries).
Julien Jomaux - https://gemenergyanalytics.substack.com/
Prices are pushed down in the middle of the day
Solar is pushing prices down in the middle of the day  also called the Duck curve or
Canyon curve.
Julien Jomaux - https://gemenergyanalytics.substack.com/
Prices are pushed down in the middle of the day
• Left: heatmap of prices. Right: heatmap of solar generation
• Each box is one hour of one week (average of 7 hours). The green spot on the left (low prices) is clearly similar to the
yellow spot on the right (solar generation).
Julien Jomaux - https://gemenergyanalytics.substack.com/
Falling capture prices
• The concept of “capture price” is the price that solar will
have on average for its production if sold entirely on the
day-ahead market.
• Calculated using this formula (for one year)
∑
𝑝𝑟𝑖𝑐𝑒 ∗ 𝑝𝑟𝑜𝑑
∑
𝑝𝑟𝑜𝑑
• The capture rate is in % and is the ration between the
capture price and the average price.
• Capture rate has been about 50/60% recently.
Julien Jomaux - https://gemenergyanalytics.substack.com/
Difference between max production and max value
• If we look at the value of generation per hour, we
can clearly distinguish a drop in market value as
prices tend to be very low at these moments.
• There is a difference to have maximal value and
maximal output.
Julien Jomaux - https://gemenergyanalytics.substack.com/
Declining capture rates
Evolution of the monthly capture rate is clear as solar capacity is increasing.
Julien Jomaux - https://gemenergyanalytics.substack.com/
Difference between max production and max value
Germany - 2024
30
25
Total Daily Solar Value [M€/day]
20
15
10
5
0
-5
0%
5%
10%
15%
20%
25%
30%
35%
40%
-10
-15
-20
GEM Energy Analytics | Julien Jomaux
-25
Percentage of the daily load covered by solar
Plot of the daily market value of solar in function of the share of the load in that day.
Julien Jomaux - https://gemenergyanalytics.substack.com/
Enough wind for Christmas
• In some days, wind is enough to cover a large
part of the demand. This was the case on
Christmas day 2023 (low demand during an
holiday).
Julien Jomaux - https://gemenergyanalytics.substack.com/
• Part 1: Some physics on electricity
Agenda
• Part 2: The basics of power trading in Europe
• Part 3: Focus on the impact of renewables
• Part 4: New trends
• Part 5: Particular events
Julien Jomaux - https://gemenergyanalytics.substack.com/
The rise of large-scale batteries
Project in Belgium from Engie (200 MW / 800 MWh)
Julien Jomaux - https://gemenergyanalytics.substack.com/
The rise of large-scale batteries
Julien Jomaux - https://gemenergyanalytics.substack.com/
The rise of large-scale batteries
Large scale batteries are getting really large in terms of power, with noticeable impact on the power grid.
Julien Jomaux - https://gemenergyanalytics.substack.com/
The rise of large-scale batteries
• Likely to capture the main revenues for
short-term flexibility.
• Progressively capture an increasing
amount of energy spread (arbitrage
between cheap and expensive power
prices within the same day).
Julien Jomaux - https://gemenergyanalytics.substack.com/
Capacity markets
• Besides energy-only markets (what we have
been describing), there is a trend to have
“capacity markets” for ensuring sufficient firm
capacity (= security of supply).
• Different names depending on the country.
• Various technologies to be supported, from
gas power plant to batteries and load shifting.
Julien Jomaux - https://gemenergyanalytics.substack.com/
Capacity markets
Julien Jomaux - https://gemenergyanalytics.substack.com/
Contract-for-differences
• Trend to support the renewable expansion
with a “contract-for-difference”.
• It serves as a long-term guarantee for the
renewable generators to receive a fixed price
(or equivalent).
• It makes renewables project more bankable,
because the revenues are known.
• The price risk is taken by a public entity in
general.
Julien Jomaux - https://gemenergyanalytics.substack.com/
Contract-for-differences
There exists a range of CfD: details matter
• The price risk might be problematic.
• In addition, if it is based solely on production
level (in MWh), the economic value is not
optimized (see graphs on the left).
• There are other kinds of CfD that target more
the economic value and less the maximal
output (such as financial CfD or capabilitybased CfD).
Julien Jomaux - https://gemenergyanalytics.substack.com/
Green Hydrogen: slow progress
Clean_Hydrogen_Monitor_11-2023_DIGITAL.pdf
The development of green hydrogen is disappointing for the moment  much less capacity is being built
compared to previous projections.
Julien Jomaux - https://gemenergyanalytics.substack.com/
• Part 1: Some physics on electricity
Agenda
• Part 2: The basics of power trading in Europe
• Part 3: Focus on the impact of renewables
• Part 4: New trends
• Part 5: Particular events
Julien Jomaux - https://gemenergyanalytics.substack.com/
1. Energy Crisis
• The energy crisis has been a real shock for the
European economy.
• Gas prices jumped to level 10 times and more
the normal price level.
• As gas power plants are often the ones marginal
ones, electricity prices went very high as well.
• Nevertheless, gas price was not the only reason:
• Very poor performance of French nuclear.
• Very low level of hydro.
Julien Jomaux - https://gemenergyanalytics.substack.com/
1. Energy Crisis
Prices were really elevated in 2022 (5 times more expensive). Last year, it was much more moderated,
even though higher than before. Also, Italy and Eastern Europe are still experiencing high prices.
Julien Jomaux - https://gemenergyanalytics.substack.com/
2. The lack of capacity in extreme situations
In some particular days, prices are much higher (here on 12 December 2024, arguably the worst day in
2024). Clean spark spreads were really high for that day.
All sources on : What happens to intraday and balancing markets during a Dunkelflaute?
Julien Jomaux - https://gemenergyanalytics.substack.com/
2. The lack of capacity in extreme situations
Relatively rare phenomena
• When renewables are very low and demand is
high, traditional capacity is used extensively.
This happens during the so-called
“Dunkelflaute” periods.
• Only a few days in 2024, but the prices went
very high, much higher than usual (see the right
part of the graph on the left).
• This also happens at peak time in Eastern
Europe during the summer 2024 (heat wave and
no solar and little wind).
All sources on : What happens to intraday and balancing markets during a Dunkelflaute?
Julien Jomaux - https://gemenergyanalytics.substack.com/
2. The lack of capacity in extreme situations
• All markets are interlinked. This is very clear when
there is a lack of generation capacity available.
• All prices tend to be higher.
• Here is the impact on intraday prices (graph above) and
on the imbalance price in Germany (graph below).
All sources on : What happens to intraday and balancing markets during a Dunkelflaute?
Julien Jomaux - https://gemenergyanalytics.substack.com/
2. The lack of capacity in extreme situations
All markets are interlinked. This is very clear when there is
a lack of generation capacity available.
All prices tend to be higher.
Here is the impact on the balancing markets (price for
capacity of balancing reserves).
Julien Jomaux - https://gemenergyanalytics.substack.com/
3. Sudden change in electricity balance
Impact of the forced outage one nuclear power plant in Belgium
• A sudden change in the balance will have an
impact on the activation of reserves, which
would have consequences in intraday markets
as well.
• Here is the spike of imbalance price in Belgium
after a nuclear reactor went offline (forced
outage).
• Such a change will have less impact on a larger
grid (such as Germany).
Elia
• Such incidents are used (among other things) to
dimension the required reserves.
Julien Jomaux - https://gemenergyanalytics.substack.com/
4. A small Dunkelflaute event
From Montel Analytics  a nice example of the interactions between the markets (11 December)
Julien Jomaux - https://gemenergyanalytics.substack.com/
5. Too much solar compared to forecast
• Similarly to the loss of a large generator, too much
power is also possible, for example during a wrong
forecast of solar production.
• Here, the Belgian imbalance price went very low,
because the TSO had to activate emergency
measures to absorb the solar production.
Elia
Julien Jomaux - https://gemenergyanalytics.substack.com/
Conclusion of these events
• Electricity markets are interconnected in time and in space. An impact in one will affect the other
timescales and countries.
• Between time horizons, we will have progressively more batteries connecting them, which would
normally attenuate the extreme events (reduce the spreads).
• Between locations, we will have progressively more interconnections, which would export the events
from one location to another.
• Nevertheless, the increase of renewables will push the need for both “time connection” and “location
connection”
• In markets with low renewable, prices are much more aligned as power plants were using
traditional commodities (gad, coal).
• In market with high renewables, prices are decoupling as one zone might have favorable
wind/solar condition while another does not.
• As complexity increases, there are an increasing amount of algorithmic trading, forecast companies,
analysists, etc. in the power sector. Interesting times to be part of this world.
Julien Jomaux - https://gemenergyanalytics.substack.com/