Day-Ahead and Intraday Electricity Market Regulation

1. Introduction

The day-ahead and intraday electricity markets are important parts of the modern electricity market. They allow electricity producers, suppliers, traders, aggregators and consumers to buy and sell electricity before it is physically delivered.

The day-ahead market mainly determines electricity trading for the following day. The intraday market allows participants to change their positions closer to the actual delivery time. This is especially important when electricity production or demand changes unexpectedly.

In the EU, these markets are mainly regulated through Regulation (EU) 2015/1222 (CACM Regulation) and Regulation (EU) 2019/943 on the internal market for electricity. (ACER)

2. Meaning of the Day-Ahead Market

The day-ahead market is a market in which participants submit bids to buy or sell electricity for the following day.

For example, a solar generator may estimate that it will produce 100 MWh tomorrow and submit a selling offer. Suppliers and other market participants submit buying bids.

The market algorithm matches these bids and determines:

the amount of electricity traded;

the market-clearing price; and

the electricity exchanges between bidding zones.

Under EU rules, day-ahead coupling is organised as an implicit auction. The market algorithm considers both electricity bids and available cross-border transmission capacity. (ACER)

3. Meaning of the Intraday Market

The intraday market operates closer to real-time delivery.

This is important because forecasts can change after the day-ahead market closes. For example:

wind production may be lower than expected;

solar generation may suddenly fall because of clouds;

electricity demand may increase;

a power plant may become unavailable.

Participants can therefore buy or sell electricity again in the intraday market to correct their positions.

EU rules require NEMOs to allow trading as close to real time as possible, at least until the applicable intraday cross-zonal gate closure time. (Eur-Lex)

4. Market Coupling

A major feature of EU regulation is market coupling.

Instead of treating every national electricity market separately, the system connects different bidding zones. Available cross-border capacity is allocated together with electricity trades.

The CACM framework requires coordinated capacity calculation and cross-zonal allocation. The objective is to use available transmission capacity efficiently while maintaining system security. (ACER)

The day-ahead market generally uses price coupling, while the intraday market uses continuous trading supplemented by intraday auctions. (ACER)

5. Role of NEMOs

Nominated Electricity Market Operators (NEMOs) operate important parts of the day-ahead and intraday markets.

The CACM Regulation provides rules for their designation and operation. Each EU Member State must ensure that at least one NEMO is designated to perform single day-ahead and intraday coupling. NEMOs may also provide services across borders under the EU framework. (ACER)

NEMOs work together to develop the algorithms that match bids and allocate cross-zonal capacity.

6. Important Regulatory Principles

Under Article 7 of Regulation 2019/943, day-ahead and intraday markets should be:

Non-discriminatory – participants should receive fair market access.

Transparent – market rules and results should be sufficiently clear.

Competitive – prices should normally develop from demand and supply.

Cross-border – participants should be able to trade across bidding zones.

Operationally secure – trading must not threaten electricity-system security.

Flexible – markets should support storage, demand response and flexible generation. (Eur-Lex)

The Regulation also requires NEMOs to provide trading opportunities with sufficiently small products to facilitate participation by demand response, storage and small renewable generators. (Eur-Lex)

7. Intraday Gate Closure and Congestion

A major legal issue is the intraday cross-zonal gate closure time. Under the current EU framework, the cross-zonal intraday gate closure is generally set at 60 minutes before the relevant delivery period, although the regulatory framework continues to evolve. (ACER)

Cross-border capacity can become scarce because transmission networks have physical limits. Therefore, the CACM Regulation establishes rules for congestion management and capacity allocation.

Where congestion occurs, the market mechanism can result in different prices between bidding zones.

8. Price Formation

EU law requires electricity prices to be formed through demand and supply and discourages artificial interference with wholesale price formation.

Regulation 2019/943 also permits harmonised technical minimum and maximum clearing prices for day-ahead and intraday markets, with mechanisms for adjusting these limits when necessary. (Eur-Lex)

This is important during periods of extreme scarcity or very high renewable generation.

9. Relevant Case Laws

AEM v AEM Torino (Joined Cases C-128/03 and C-129/03)

The Court of Justice examined issues concerning access to electricity networks and the functioning of electricity markets. The case is useful for understanding the EU principle that electricity-market arrangements should avoid unjustified discriminatory treatment and should respect the rules governing market access.

Commission v Slovakia (Case C-264/09)

This case concerned electricity transmission arrangements and preferential access. It demonstrates the importance of non-discriminatory access to electricity infrastructure, a principle closely connected with cross-border electricity trading and market coupling.

Federutility and Others (Case C-265/08)

The Court considered state intervention in energy prices. The judgment is relevant to day-ahead and intraday markets because it explains that government intervention in energy markets must be justified and compatible with EU market principles. These cases provide broader legal principles rather than being direct disputes about modern EU day-ahead algorithms.

10. Conclusion

Day-ahead and intraday markets form a continuous electricity-trading framework. The day-ahead market creates the main trading schedule for the following day, while the intraday market allows participants to correct their positions closer to real time.

The EU regulatory system combines market competition, cross-border market coupling, transmission-capacity management, transparency and system security. The CACM Regulation provides the detailed framework for market coupling, while Regulation 2019/943 establishes broader principles for electricity-market operation. (ACER)

For modern energy law, these markets are particularly important because increasing wind, solar, batteries, electric vehicles and demand-response participation requires electricity trading to become faster, more flexible and increasingly coordinated across national borders.