Spot market (EPEX Spot)


The EPEX spot market , is a European power market where short-term power supply contracts, also called spot contracts, are traded. EPEX stands for "European Power Exchange" and its headquarters are located in Paris. The spot market allows for immediate trading of electrical energy, with delivery of energy within a short period of time, often within the same day or the next day.  

The EPEX spot market contributes to the efficiency of the electricity market by enabling market participants to respond to changes in electricity demand and supply at short notice. It plays an important role in the pricing of electrical energy and helps to ensure security of supply and the balance between supply and demand in the European electricity market.

EPEX SPOT plays a central role in European power trading. It supplies Germany, France, Austria, Belgium, Denmark, Finland, the United Kingdom, Luxembourg, the Netherlands, Norway, Sweden, Poland, and Switzerland, thus facilitating cross-border trading in Europe.

The EPEX Spot Market is subject to strict regulatory and supervisory requirements to ensure fairness, transparency and integrity of the market.

How does the spot market work?

In contrast to the derivatives market (EEX Leipzig), the EPEX spot market in Paris trades quantities of power that can be delivered at short notice. These are sold either one day in advance in day-ahead trading or on the same day in intraday trading. Trading takes place in units of megawatt hours (MWh). In 2022, around 616 terawatt hours of electricity were traded on the spot market.

Day-ahead market and intraday trading

On EPEX Spot, participants can offset both surpluses and shortfalls of ordered electricity quantities at short notice. A distinction is made between two markets on the spot market.

Day-ahead market: The day-ahead market is organized in the form of an auction. By 12 noon on the previous day at the latest, both electricity buyers and sellers submit their bids for the next day. The electricity price is formed by the daily submission of bids by exchange members for the auction on the following day. It results from the intersection of supply and demand and is also referred to as the market clearing price. As soon as two bids coincide, the electricity is delivered at the agreed price. In addition to bids for electricity quantities per full hour, block bids are also traded, for example for electricity-intensive morning hours.  

Intraday trading: In intraday trading, on the other hand, electricity is traded continuously. Here, the required quantities of electricity can be precisely adjusted. This allows any shortfalls or surpluses to be corrected after day-ahead trading. In recent years, the time span for same-day electricity trading has continuously shortened. In Germany, it is even possible to make trades up to five minutes before the start of electricity delivery. Intraday trading for 15-minute bids starts at 3:00 p.m. of the previous day.

In addition to the different trading periods, day-ahead trading and intraday trading also differ significantly in terms of pricing. While day-ahead trading is based on the concept of market clearing price, in which the last accepted bid price determines the price for all transactions, the price determination in continuous intraday trading on EPEX is carried out in the so-called "pay-as-bid" procedure. In this process, the price that was accepted in each individual transaction is always calculated, resulting in bid prices. As a result, there are no uniform prices for the respective products. Depending on the time of trading, different prices may occur for the same product.

Price influences on the spot market

Prices on the spot market can be influenced by a variety of factors. They are therefore subject to high volatilities. Fluctuations in generation output, weather conditions (especially due to the increasing share of renewables in the power mix), consumer behavior, supply fluctuations due to supply chains or production behavior, but also market events such as natural disasters, political or economic developments can have a direct impact on prices.