Trilateral Market Coupling
On 21 November 2006, a new mechanism known as market coupling (or implicit auctions) was adopted to allocate daily capacities on the France-Belgium and Belgium-Netherlands interconnections by simultaneous use of the three countries' market order books, replacing the previous system of explicit auctions.
Market coupling is a mechanism used to integrate electricity markets in different physical areas while requiring minimal changes to the local arrangements. Market coupling replaces a two-step process: a daily explicit auction of transmission capacity followed by the day-ahead energy markets. Market coupling integrates transmission allocations and energy trading, removing many of the inefficiencies at the day-ahead stage.
Market coupling allows exchanges to remain separate legal entities with individual trading platforms, contracts and clearing; a single regional market is created by optimising the use of the already existing transmission capacity.
In November 2007 the first anniversary of the Trilateral Market Coupling (TLC) was celebrated with excellent results. As a result of market coupling, the electricity prices on the French Powernext, Belgian Belpex and Dutch APX Power NL Day-Ahead Market were identical in more than 60 % of the time. While Belpex and APX Power NL prices were identical in 73 % of the time and Powernext and Belpex prices identical in 85 % of the time. The convergence of the prices of electricity traded on the energy exchanges provides the market with several benefits such as a lowered risk and easier access for the smaller players, and adds to the social economical benefit of the countries involved.
The use of existing interconnection capacity between the involved countries increased significantly. The utilised daily allocated cross border capacity on the Dutch-Belgian interconnection increased from 347 MW to 544 MW. The Belgian-French interconnection saw similar trends with increasing utilisation of cross border capacity. Dutch imports and export flows both increased since the introduction of Trilateral Market Coupling.
Trilateral Market Coupling contributed to the development of the now liquid Belgian spot market and consequently made possible the establishment of Belgium’s power exchange, Belpex. Besides the development of the Trilateral Market Coupling, APX has an important role in the operational phase. APX-ENDEX is responsible for the central operations on a rotation basis, as well as all ICT support for the Trilateral Market Coupling systems.
APX-ENDEX publishes the hourly flows between Belgium and the Netherlands in its daily market results of the Dutch APX Power NL Day-Ahead Market contributing to market transparency and insight on the development of the coupled region.
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