Auctioning of EPADs
Since 2023, Svenska kraftnät has regularly conducted auctions of so-called EPAD contracts corresponding to approximately 15 percent of the Swedish grid’s transmission capacity between the bidding zones SE2 and SE3, and SE3 and SE4.
The auctions are part of Svenska kraftnät’s mandate to support liquidity in the financial electricity market and to improve the ability of market participants to hedge the price of their production or consumption.
The auctions are carried out by Svensk Kraftmäkling (SKM) on behalf of Svenska kraftnät and are based on Svenska kraftnät announcing, well in advance of each auction, which volumes and which contracts/products it intends to offer.
The contracts are auctioned by Svenska kraftnät offering to both buy and sell EPADs in the bidding zones SE2, SE3, and SE4. In practice, this means that Svenska kraftnät declares itself willing to buy a certain volume of EPAD contracts in an auction on one side of a bidding zone boundary (for example SE2) and to sell the corresponding volume in an auction on the other side (for example SE3).
The price in each auction is determined according to the principle of marginal pricing. The buy and sell transactions are linked between auctions in two adjacent bidding zones. This means that both transactions are executed provided that the marginal price at which Svenska kraftnät buys in one bidding zone is the same as, or lower than, the marginal price at which it sells in the other bidding zone. [LE1] Svenska kraftnät must always buy and sell identical volumes in each linked auction pair.
The following documents contain information on the auction principles and trading rules. The material may be updated.
Trading rules for Svenska kraftnät’s EPAD-auctions (.pdf) Opens in a new window