A turning point in electricity trading: Day Ahead switches to 15-minute products

Until now, on the EPEX SPOT Day-Ahead market, electricity volumes and prices for the next day were traded exclusively in hourly blocks. This rigid structure made it difficult to effectively reflect short-term fluctuations in electricity generation and consumption – particularly those caused by the increasing integration of renewable energy. For example, solar power had to be sold in hourly blocks, even though the actual generation within an hour can vary significantly. Since these hourly blocks only represent average values, market participants were forced to make intraday adjustments to compensate for forecast deviations.

The introduction of new quarter-hourly products represents a significant step toward greater flexibility and efficiency in electricity trading. Especially in an energy system increasingly driven by renewables, this change promises substantial improvements by enabling more efficient compensation for short-term fluctuations. 

Quarter-Hourly Products at EPEX SPOT: What Specifically Changes in the Day-Ahead Market?

In the future, EPEX SPOT will move away from hourly blocks toward quarter-hourly products. Concretely, this means the Market Time Unit (MTU) will shift from a 60-minute to a 15-minute resolution. The daily auction at 12:00 CET will no longer be limited to hourly intervals but will be conducted simultaneously at 15-minute intervals across all SDAC bidding zones and borders.

What does this practically mean for electricity trading? Simply put, suppliers and consumers can more accurately forecast and position their electricity production and consumption in the market. This results in more efficient control of energy flows in the grid, significantly improving the integration of short-term fluctuations - especially those related to renewable energy sources like wind and solar.

Another benefit of this new trading structure: market participants remain flexible. Depending on the nominated electricity market operator (NEMO), they can continue to access 30-minute and 60-minute products alongside the new quarter-hourly ones. EPEX SPOT will offer all three time intervals in all SDAC bidding zones, allowing participants to optimize their trading strategies and even combine different time intervals as needed. 

Cross-Border European Day-Ahead Trading: How Does SDAC Work?

The introduction of 15-minute products is part of the Single Day-Ahead Coupling (SDAC), a key European project aimed at optimizing cross-border electricity trading. The goal of SDAC is to establish an integrated, Europe-wide Day-Ahead electricity market that efficiently allocates available cross-border transmission capacities. But how does this coupling work in practice? SDAC connects the wholesale markets of various European regions via a common algorithm, taking into account both the bids of market participants and the limited cross-border transmission capacities. This ensures that cross-border electricity flows are always managed in a way that the overall distribution of electricity is as efficient as possible, ultimately increasing the overall European welfare.

What are the benefits? In addition to increased competitive efficiency, market participants benefit from higher liquidity and improved integration of renewable energies. Moreover, the finer temporal resolution allows more precise tracking of short-term changes in electricity generation, enhancing grid stability and enabling more accurate consumption forecasts. 

Regulatory Background: Why All the Effort?

The introduction of quarter-hourly products isn't happening on a whim - it is actually driven by regulatory requirements set by the European Union. According to an EU regulation, all Transmission System Operators (TSOs) in the member states must implement a 15-minute imbalance settlement period (ISP). This regulation further obligates all European electricity exchanges (the so-called Nominated Electricity Market Operators, NEMOs) to offer corresponding 15-minute products in all SDAC-coupled markets.

Additionally, the EU internal electricity market mandates that market participants must be allowed to trade in intervals at least as short as the ISP. The goal of this regulation is to create a unified and efficient market structure across Europe. Practically, the finer time resolution simplifies forecasting and trading of fluctuating electricity volumes - particularly from wind and solar - which ultimately enhances grid stability. 

Countdown to Quarter-Hour: Timeline for Implementing the New Products

The go-live date for the introduction of 15-minute products in the Day-Ahead market was originally scheduled for June 11, 2025, with first delivery on June 12. The launch has now been postponed to September 30, 2025, with the first trading day on October 1.

While performance and procedural tests were completed successfully and many market participants are considered technically ready, some project parties were not able to ensure the required operational readiness in time. As a result, implementation within the original timeline was not possible.

Various alternative go-live scenarios were evaluated, but could not be realized within the given timeframe. The updated project planning will be presented at the upcoming meetings of the Market Coupling Consultative Group on June 2 and the Market Stakeholder Committee on July 3. 

How Does the Transition Affect Price Formation?

With the introduction of quarter-hour products, price formation also undergoes an update. Previously, electricity prices were calculated for hourly intervals based on the principle of the "Market Clearing Price" (MCP). The MCP was determined by the most expensive generation unit required to meet the hourly demand.

The new quarter-hourly products make price formation significantly more precise. Instead of a single price forecast per hour, market participants will now need to make four forecasts per hour. It will be interesting to observe to what extent the Day-Ahead price will directly reflect the typical rapid production increases and decreases (so-called ramps) of photovoltaic systems – a phenomenon that has previously been visible mainly on the Intraday market. In the short term, this finer price structure could lead to increased price volatility.

Behind this price formation lies a Europe-wide algorithm that processes bids from electricity exchanges and TSOs. The algorithm calculates the optimal solution for supply and demand within a tight timeframe, keeping prices transparent and efficient. Results (matched trade volumes, clearing prices, and planned energy exchanges) are promptly communicated to market participants to ensure stable and robust market operations.

Long-term, this granular price formation facilitates more precise market management, creates attractive new trading opportunities, and enables flexible consumers and producers to better align their assets with short-term price fluctuations. An exciting new era in electricity trading, isn't it? 

What Does the Transition Mean for Electricity Traders and Renewable Energy Operators?

The shift to quarter-hourly products brings significant changes, especially for electricity traders and operators of photovoltaic systems, and these changes are largely positive. The typical "PV bell", which represents the generation of solar power throughout the day, can now be more precisely traded directly in the Day-Ahead market. This allows power traders and their clients to benefit from a better alignment between market supply and actual generation. At the same time, the future market reference value will also reflect the 15-minute structure, leading to a more accurate reflection of the systematic costs of solar power generation.

For market participants, this means a much more accurate representation of supply and demand based on actual generation profiles, creating more targeted trading opportunities. Operators of renewable energy systems may see long-term reductions in imbalance energy costs, as fewer adjustments in the Intraday market will be necessary. Electricity traders will also benefit, as the adjustment to real-generation patterns can now take place directly on the Day-Ahead market, without the need to shift these short-term fluctuations to the Intraday market. However, it remains to be seen how price structures will develop in practice and to what extent all market participants – whether due to process or contractual reasons – will fully transition to the new 15-minute structure.

However, it is important to note that this market change alone will not automatically lead to greater system flexibility. This is heavily dependent on the physical availability of flexible generation and consumption assets. Furthermore, the shift in trading to the Day-Ahead auction could reduce liquidity in the Intraday auctions, which might have both positive and negative effects on trading opportunities. 

Note: Next Kraftwerke assumes no liability for the completeness, accuracy and timeliness of the information. This article is for information purposes only and does not replace individual legal advice.