Our electricity markets

OMIE manages the wholesale electricity market (referred to as cash or “spot”) on the Iberian Peninsula. The organized electricity market caters for the trading of electricity between agents (producers, consumers, retailers, etc.) at a price that is known, transparent and accessible.

The day-ahead market

Electricity prices in Europe are set on a daily basis (every day of the year) at 12 noon, for the twenty-four hours of the following day, in what we refer to as the Daily Market. The price and volume of energy over a specific hour are determined by the point at which the supply and demand curves meet, according to the marginal pricing model adopted by the EU in compliance with the Commission Regulation (EU) 2015/1222 of 24 July 2015 establishing a guideline on capacity allocation and congestion management. For that, it is used the algorithm approved for all European markets (EUPHEMIA) and now of application, besides Spain and Portugal, in Austria, Belgium, Czech Republic, Denmark, Estonia, France, Finland, Germany, Hungary, Italy, Latvia, Lithuania, Luxemburg, the Netherlands, Poland, Romania, Slovakia, Slovenia, Sweden, Norway, and the United Kingdom.

Buying and selling agents who find themselves in Spain or Portugal will present their offers to the day-ahead market through OMIE, which is the only designated NEMO in those countries. Their purchase and sale bids are accepted according to their economic merit order and depending on the available interconnection capacity between the price zones. If at a certain time of the day the capacity of the interconnection between both bidding zones is such that it permits the flow of the electricity resulting from the negotiation, the price of electricity for that hour will be the same for both bidding zones. If, on the other hand, the interconnection is fully occupied at that time, the price-setting algorithm (EUPHEMIA) results in a different price in each bidding zone. In 2018, the price of electricity was the same in Spain and Portugal for 95% of the time, which shows a high convergence of prices between both bidding zones, however between Spain and France this figure only reached 27.5% of the hours.

The mechanism described for the formation of the price of electricity in the daily market at a European level is called a single day-ahead price (price) coupling.

The results of the day-ahead market, as determined by the free trade between buying and selling agents, are the most efficient solution from an economic perspective. Nonetheless, given the nature of electricity, this process also needs to be feasible in physical terms. Accordingly, once these results have been obtained, they are sent to the System Operator for their validation from the standpoint of technical viability. This process is known as the management of the system’s technical limitations and ensures that the market results can be technically accommodated. This means that the day-ahead market results may be altered slightly, in response to an analysis of the technical limitations conducted by the System Operator, giving rise to a viable daily programme.

OMIE is a benchmark company in the management of wholesale markets, and our experience within the scope of the Iberian market has enabled us to lead European integration projects such as the coupling of day-ahead markets in the EU.

For further details on the day-ahead market’s operation, please click here

The intraday market

After the day-ahead market, agents may once again buy and sell electricity on the intraday market, in the continuous market or at different trading sessions some hours earlier than real time.

The continuous intraday market, at European level, allows the negotiation with agents that are in the same or different bidding zones if there is available interzonal capacity. In this market, you can negotiate up to one hour before the moment of delivery of energy.

Moreover, there are six trading sessions based on auctions such as those described for the day-ahead market, where the volume of energy and each hourly price are determined by the point where supply and demand meet.

These implicit intraday auctions of the MIBEL scope constitute one of the most liquid intraday markets in the EU, and allow all agents to adjust easily and on equal terms with any other operator their position within the same day of the physical delivery. These intraday auctions usually yield prices similar to those resulting in the day-ahead market and allow buying and selling agents to readjust their schedules (purchase and sale respectively) up to four hours before the real time.

As of that moment, there are other markets managed by the System Operator in which a balance is assured at all times between production and consumption.

For further details on the intraday market’s operation, please click here