What Is Volume Allocation?
Volume Allocation is a backup service used when a NEMO in the CORE MNA region becomes decoupled from Single Day-Ahead Coupling (SDAC), the main European market coupling (Partial Decoupling in a CORE MNA area - further information can be found in the SDAC Fallback Manual. Its purpose is to ensure just one consistent electricity price in a Bidding Zone.
Why Is It Important?
In normal conditions, European electricity markets use SDAC to align prices across bidding zones. If CORE MNA region decouples due to technical or market issues, this alignment breaks, and prices could vary by zone. Volume Allocation prevents this by applying SDAC prices and maintaining fairness for all customers.
How It Works?
- Activated when a NEMO in the CORE MNA region is decoupled (Partial Decoupling).
- Uses SDAC Day-ahead prices as fixed input and enables Buy and Sell Volume Allocation requests to be executed at these known SDAC prices.
- The allocation is based on customers’ existing, updated or new Volume Allocation requests.
- Volumes are distributed according to these orders.
- If a bidding zone has an imbalance in Buy and Sell volumes in an MTU, it is curtailed because cross-border flows are not available (no price risk, but volume risk).
What It Means for Customers
- Customers get the same SDAC-based price during disruptions if volume match.
- Customers’ curve orders become Volume Allocation requests and can be amended directly within Volume Allocation.
- New Volume Allocation Requests can be entered.
- Any curtailment follows clear rules, for example: 100MW Buy and 50 MW Sell leads to the fact that only 50MW will be executed, meaning curtailment of 50% on the Buy side.
FAQ – Volume Allocation in Partial Decoupling (WCE Region)
1. When is Volume Allocation used in WCE?
Volume Allocation may be used only in the case of a partial decoupling in the WCE region of the Single Day-Ahead Coupling (SDAC).
More specifically, Nord Pool may offer Volume Allocation where:
- Nord Pool is the subject of a Market Decoupling in the WCE Market; and
- There is a SDAC Day-ahead price for the relevant bidding zone(s).
Under normal operations, Volume Allocation is not used.
2. What is changing compared to the previous fallback setup?
Previously, a decoupled NEMO could run a local price auction, which could result in different prices within the same bidding zone.
Now, in WCE:
- There will always be a single SDAC price for the bidding zone.
- Decoupled NEMOs will not run separate local auctions.
- All matching is conducted using the SDAC reference price.
3. What exactly is Volume Allocation?
Volume Allocation is a fallback process that:
- Allocates buy and sell volumes within each bidding zone only.
- Uses the official SDAC bidding zone price.
- Does not involve cross-border trades.
- Allows members to adjust volumes (not prices).
4. Do I need to change my bidding strategy?
No. Prices are determined solely by the SDAC price.
Members only need to consider whether to adjust their expected buy and sell volumes during the allocation window.
5. Will the prices change because of Volume Allocation?
No. Prices are determined solely by the SDAC price. Members only update their volumes.
6. How will I know Volume Allocation has been activated?
You will receive operational messages indicating:
- Partial decoupling.
- Volume Allocation preparation.
- Opening and closing of the adjustment window.
- Publication of results.
The Auction system interface will also indicate when it is operating in Volume Allocation mode.
7. How are results calculated?
Allocation is performed using:
- Your submitted volumes.
- The official SDAC bidding-zone price.
- Volume Allocation Request volumes only, without cross-border flows.
8. Will this change affect settlement?
Settlement amounts follow the published SDAC bidding-zone price. There are no additional or separate fallback prices.
9. Does this process apply to full decoupling?
No. Full decoupling has separate fallback arrangements. Volume Allocation applies only in partial decoupling in WCE.
More specifically, Nord Pool may offer Volume Allocation where:
- Nord Pool is the subject of a Market Decoupling in the WCE Market; and
- There is a SDAC Day-ahead price for the relevant bidding zone(s).
10. Where can I get help?
You can contact:
- Your local Market Manager
- support@nordpoolgroup.com
11. What is the process if partial decoupling occurs in the Nordic/Baltic regions?
The volume allocation process is only applicable in the WCE region in the case of a partial decoupling and does not apply to the Nordic/Baltic region.
Refer to the Market Regulations for the Nordic/Baltic Regional Coupling process.
12. How is volume matching done?
Refer to the following chapter of the Auction User Guide: