The current electricity market model

In accordance with the principle of subsidiarity (Article 5 of the Treaty on the Functioning of the European Union (TFEU)), governing the activities of EU agencies, the instructions for the liberalization of the electricity market do not include detailed rules regarding the organisational structure of each national electricity market. As a result, Member States have retained the right to choose their own model for the organisation and operation model of their electricity market.

In this framework, by exercising this discretion of EU law, Greece adopted the model of the mandatory wholesale electricity market (mandatory pool system). 

The mandatory pool system is the model where all electricity and its supplementary products to be produced, consumed and distributed the day ahead in the Greek market are traded. All participants in the Greek market are required to participate in the mandatory pool, and no physical bilateral transactions are allowed between participants in the market.

The model is the mechanism for conducting electricity transactions between electricity producers and importers and electricity suppliers, self-supplied consumers and exporters. Specifically, producers and importers sell their produced energy, and suppliers and exporters purchase energy, which they resell in the retail market or export it, respectively. 

Implementation of the model is governed by the provisions of the Grid Code for the Hellenic Electricity Transmission System (GC HETS) and the Power Exchange Code for Electricity (PECE).

The Greek wholesale electricity market consists of separate markets, which are distinct in reference to their time framework.

  • Assignment of physical rights of electricity transmission to interconnections
  • Short-run (day-ahead) wholesale market (Day-Ahead Scheduling - DAS), which includes the daily energy market and the daily ancillary services market, whereby the Dispatch Schedule (DS) of the system’s units emerges.
  • Real-Time Dispatch (RTD), which is not a market, but ensures the secure operation of the system.
  • Ex-post balancing energy market, which for the time being is limited to the ex-post calculation of the Imbalances Marginal Price (IMP), based on actual data for injections and offtakes carried out on each past dispatch day and during imbalances settlement, on the basis of the difference between the actual quantities and the initially scheduled quantities on the DAS, with the calculated IMP.

In summary, the main operations of the Greek electricity market, in the context of its separate markets, are: 

  • Annual, monthly and daily auctions of physical transmission rights (PTR). 
  • The secondary PTR market, for the transfer and/or resale of assigned annual and monthly PTRs of one participant to another 
  • The Day-Ahead Scheduling 
  • Confirmation of import and export schedules with neighbouring operators and control of final schedules 
  • DAS settlement
  • Preparation of Day-Ahead and Intra-Day dispatching schedule of system units (DS and IDS)
  • Tracking availability of units and dispatch orders
  • Tracking energy quantities and ancillary services in real time 
  • Methodology for calculation of Imbalances Marginal Price (IMP)
  • Imbalances settlement
  • Ancillary services settlement
  • Monthly reports and publications.




The European Target Model 

With the aim of the integration of the European Markets, the Agency for the Cooperation of Energy Regulators (ACER) has proposed the single European market model, known also as the Target Model. The Target Model achieves optimisation in the use of the Transmission System capacity through coordinated practices by System Operators, achieving reliable prices and liquidity in the allocation of the capacity of interconnections for the day-ahead market, the efficient operation of the forward markets and the efficient design of the intraday markets for the allocation of the capacity of interconnections.

The European model is based on the Framework Guidelines issued by ACER and the Network Codes issued by the European Network of Transmission System Operators for Electricity (ENTSO-E) and are approved by the European Commission, with the purpose of having harmonised rules in place for cross-border electricity exchanges and for the operation of the wholesale electricity markets.

The five key characteristics of the European Model, in the electricity market’s time frame are:

  1. Capacity calculation methodology: The Target Model gives National Regulatory Authorities the option of revising and approving the volume of annual capacity rights, as well as the principles governing the allocation of capacity at different periods of time. The European Model allows two alternative methodologies for the calculation of transmission capacity between different zones, the Available Transfer Capacity (ATC) or the Flow Based (FB) method.
  2. Long-term transmission rights: The European Model defines the development of cross-border markets based on harmonized long-term rights for access to the capacity of interconnections. 
  3. Day-ahead price coupling: Price coupling is achieved through implicit auctions, where energy flows are calculated by taking into consideration, other than the price, also the interconnection capacity. According to the coupling method of electricity prices, prices across borders will converge when there is adequate cross-border capacity. Application of the European Price Coupling (EPC) mechanism across Europe aims at maximising the total performance of electricity markets, providing electricity flows from low-price regions to high-price regions. 
  4. Continuous intraday trading: The design of Intraday markets for allocation of interconnection capacity is based on the creation of a single European platform for intraday markets. This platform will determine, through continuous implicit trading, the pricing method for interconnection capacity will be determined, to reflect their congestion on the price. The intraday market allows participants to buy or sell energy to optimise their positions by minimizing their imbalances in real time. 
  5. Electricity balancing: Electricity balancing includes three main elements: assurance of reserves, activation of balancing energy and arrangement of the imbalance of energy balances. The European Model supports a greater allocation of the balancing resources between Transmission System Operators, who must push forward the harmonisation of the balancing products and reserve products, taking into consideration local technical particularities. 


The transformation of the Greek electricity market

The current model of the Greek electricity market differs substantially from the European Target Model. First, in terms of structure, there is no intraday market in the Greek market, and the balancing market includes only the imbalances settlement. Also, short-term rights of electricity transmission to interconnections are auctioned in an explicit way, which means that energy flows are not optimised, leading a smaller price convergence and sometimes the energy flows are to the opposite direction than the one rationally arising from the price difference. Additionally, the Day Ahead market clearing based on the current model takes into consideration ancillary services, which does not apply in the target model, while the clearing algorithm clearly differs between the two markets. 

The rationalisation and liberalization of the domestic electricity market aim at improving the competition conditions and creating a stable and predictable market model, with incentives for the entry of new participants in the market and the attraction of new investments, primarily to the benefit of the Greek consumer and the national economy. The minimisation of the cost and time for adjustment to the Target Model require restructuring actions and structural changes to the current organisation and operation of the wholesale market and additional regulatory measures and reforms, which are expected to go forward essentially under the creative pressure already exerted by the rapidly integrated European energy market, through the coupling of national and regional markets under way.

Law 4512/2018 defined the following markets:

  1. Wholesale market of forward electricity products (renamed energy financial market): This market allows participants to conclude electricity purchase and sale contracts, with physical delivery obligation, as they will be set out in the relevant market code and to trade in energy financial instruments.
  2. Day ahead market: This market allows participants to submit electricity transaction orders with obligation of physical delivery on the next day. In the day ahead market, the energy quantities committed through the conduct of forward product transactions are also declared, which were realised either through the forward products wholesale market or outside it. At the same time, there will be implicit allocation of the transmission capacity at interconnections, through the coupling of the day ahead markets of European countries.
  3. Intraday market: This market allows participants to place transaction orders for physical delivery on the date of fulfilment of the physical delivery, after the expiry of the deadline for placing transaction orders at the day ahead market, taking into consideration the energy quantities committed through the conduct of transactions in forward electricity products which they have realised, the day ahead market results, as well as any limitations emerging from the balancing market. Participants may carry out transactions to minimise the imbalance of their net position arising from transactions in all markets, from the quantities sold/purchased in real time. 
  4. Balancing Market: The balancing market includes the balancing capacity market, the balancing energy market and the imbalance settlement process. Participants are required to submit bid with a physical delivery obligation for their total available capacity, both in the balancing energy market and the balancing capacity market.

The operation of the three first markets has been assigned to the Hellenic Energy Exchange, whereas the Balancing Market is the exclusive responsibility of IPTO. It needs to be noted that the Hellenic Energy Exchange will serve as, being the successor of LAGIE, the Nominated Electricity Market Operator (NEMO), for the coupling of the day ahead market and the coupling of the single intraday electricity market, in accordance with the Minister’s decision No. ΠΕΝ ΑΠΕΗΛ/Γ/Φ1/οικ.184866. 

The starting point of each market’s operation, and the necessary actions for achieving their operation, are set out by a decision of the Minister of Environment and Energy, following an opinion by RAE, and on condition of the prior issue of the regulations of the separate markets and the completion of the common testing program of the systems of the involved bodies.