Coupling of electricity markets and integration of Ukraine into the EU internal market

Coupling of electricity markets (Market Coupling) is one of the key areas of Ukraine’s integration into the internal electricity market of the European Union.

The introduction of the Market Coupling mechanism will ensure the functioning of the Ukrainian day-ahead and intraday markets in accordance with the European model of electricity trading, which is based on competitive pricing, efficient use of interstate transmission capacity and uniform rules for organizing trading.

What is Market Coupling?

Market Coupling is a mechanism for integrating organized electricity markets of different countries, which ensures the simultaneous determination of the market price of electricity and the distribution of available capacity of interstate electricity networks. Within the framework of a single algorithm:

Step 1

Participants submit applications for the purchase and sale of electricity

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Step 2

The algorithm simultaneously determines market prices in all trading zones

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Step 3

Cross-border capacity is used automatically according to price signals

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Step 4

Flows go from areas with lower prices to areas with higher prices, ensuring efficient distribution of electricity

Why is this important for Ukraine?

The integration of the Ukrainian market into the single European market creates the prerequisites for:

Increasing the liquidity of organized market segments

More effective use of interstate intersections

Forming a competitive market price

Developing cross-border trade

Increasing competition between market participants

Implementing European rules for the functioning of markets

Legal basis

The introduction of Market Coupling in Ukraine is provided for by the Law of Ukraine "On the Electricity Market", which is aimed at implementing the Energy Community legislation in the energy sector, in particular, Regulation (EU) 2015/1222 of 24 July 2015 establishing guidelines on capacity allocation and congestion management. It is this Regulation that defines the legal and technological principles for the functioning of the single European electricity market, the procedure for interaction between transmission system operators and nominated market operators (NEMO), as well as the rules for the operation of the mechanism.

Tasks of the nominated market operator (NEMO)

In accordance with Article 51¹ of the Law of Ukraine “On the Electricity Market”, the nominated market operator ensures the functioning of the organized electricity market within the framework of the Market Coupling mechanism. Its main tasks include:

Receiving and registering applications from market participants, maintaining anonymized Order Books;
Ensuring algorithmic matching and allocation of orders within the single European connection (through EUPHEMIA and XBID algorithms);
Determining and publishing official market prices and volumes for each settlement period (MTU);
Performing the functions of the Central Counterparty (CCP): daily clearing, settlement of transactions and management of financial collateral (margin);
Physical and financial nomination of cross-border flows (Trade Agent / Shipping function) in cooperation with NPC Ukrenergo and JAO, etc.

Learn more about the tasks and functions of the nominated electricity market operator at the link.

UEEX and Market Coupling

Ukrainian Energy Exchange LLC consistently develops the trading and post-trading infrastructure of the electricity market in accordance with European standards.

One of the strategic areas of the Exchange’s activity is the preparation of the organizational, technological and regulatory infrastructure necessary for the integration of the Ukrainian market into the single European electricity market.

UEEX actively participates in professional dialogue on the implementation of the Market Coupling model, the development of modern exchange infrastructure, and the harmonization of the Ukrainian market with European Union legislation.

Frequently asked questions

What is SDAC?

Single Day-Ahead Coupling (SDAC) — the only European association of day-ahead markets, within which electricity prices are determined using a common algorithm for all trading zones.

What is SIDC?

Single Intraday Coupling (SIDC) — the only intraday market in Europe that ensures continuous electricity trading after the end of trading on the day-ahead market.

What is NEMO?

NEMO (Nominated Electricity Market Operator) — a nominated electricity market operator that ensures the organization of trading and interaction with the European Market Coupling system.

What is price convergence?

Price convergence is the coincidence or convergence of electricity prices in two or more trading zones as a result of market coupling, which arises from the efficient use of inter-zonal capacity.

Important! The information on this page is for informational purposes only and is intended to familiarize market participants with the European Market Coupling model and legislative changes regulating its implementation in Ukraine. As of the date of publication of the material, Ukrainian Energy Exchange LLC does not perform the functions of a nominated market operator (NEMO).