Auctioning of EPADs
Starting from the 7th February 2023, Svenska kraftnät offers auctions of EPAD contracts in the Swedish bidding zones SE2, SE3 and SE4. The contracts correspond to a total of approx. 10% of the transmission capacity between bidding zones SE2-SE3 and SE3-SE4, split on multiple durations of the contracts. The auctions are part of Svenska kraftnät’s pilot project, aiming to improve the liquidity in the financial market and increase the hedging opportunities for market participants to hedge their price risk in the physical market.
The auctions are performed by Svenska kraftmäkling (SKM) on behalf of Svenska kraftnät. The volumes and products to be offered in each auction are announced in advance. In the EPAD auctions Svenska kraftnät offers to buy a certain maximum volume in EPAD contracts in an auction in one bidding zone (for example SE3), and offers to sell the corresponding volume in the adjacent bidding zone (for example SE4).
The price in each auction is determined according to marginal pricing. Buy- and sell auctions are coupled over the bidding zone borders in such way that both auctions will result in transactions given that the marginal price for the contracts that Svenska kraftnät buy is equal or lower to the price that Svenska kraftnät sell EPAD contracts for in the adjacent bidding zone.
The contracts are allocated with the constraint that Svenska kraftnät buys and sells identical volumes in each pair of linked auctions.
The auctions in the pilot project will run under 2023, with a potential extension of one year.
Auction Schedule (.pdf) Opens in a new window