Market Coupling and the CWE Project

• Published in: Zeitschrift für Energiewirtschaft Vol. 34; no. 4; pp. 303 - 309
• Main Authors: Weber, Alexander, Graeber, Dietmar, Semmig, Andreas
• Format: Journal Article
• Language: English
• Published: Wiesbaden Vieweg Verlag 2010
• Subjects: Economics and Management; Energy; Energy Policy; Energy Systems; Renewable and Green Energy; Electricity Market; Network Code; Power Exchange; Transmission Capacity; Market Area
• ISSN: 0343-5377; 1866-2765
• DOI: 10.1007/s12398-010-0033-x

The article copes with the ongoing effort to establish implicit auctions to allocate transmission capacity on cross-border interconnectors in the power grid. By the means of implicit auctions (in contrast to explicit auctions), cross-border capacities are included in the clearing of local power exchanges. Concerning the day ahead auction, ‘market coupling’ plays an important role. Market coupling connects (formerly often national) electricity markets, simplifying cross-border trade. One of the main drivers of market coupling projects is the pursuit of European market integration i.e. allowing for convenient cross-border trade. The other reason is the perception that explicit auctions of transmission capacity (in addition to energy auctions which are often performed later) do sometimes lead to sub-optimal results. The objective function of market coupling is the maximisation of total welfare of all connected markets. Further to the explanation of different market coupling models (also regarding capacity calculation), the current development in Europe is wrapped up—including the CWE market coupling (Central Western Europe) project. The CWE market coupling is announced to start in fall 2010, coupling the day-ahead electricity markets of Belgium, France, Germany, Luxembourg and the Netherlands.