IPEX (Italian Power Exchange)

Known commonly as the “Electricity Exchange”, IPEX is the physical market for trading energy, and it is based on auction proceedings and on the definition of injection and withdrawal programmes, in which the market price of equilibrium is obtained by matching the quantity of energy demanded and the quantity supplied by market participants.

The Italian electricity exchange is under the responsibility of the Energy Markets Manager (GME S.p.A.).  The electricity exchange has the purpose of promoting impartial, transparent competition in the activities of producing, selling and buying electricity.

Through market trading, wholesalers and certain final customers can purchase energy for their own needs, with the obligation to schedule, on an hourly basis, their required withdrawal profile.

The transactions on the exchange for the regulated market are carried out by Acquirente Unico S.p.A.

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The structure of the electricity exchange can be summarised as follows:

Day-ahead market (MGP)

Accounting for the bulk of buying and selling of electricity, this market trades hourly blocks of energy for the next day. Operators participate by presenting bids indicating the quantities and the maximum/minimum price at which they are willing to buy/sell.  Trading opens at 8:00 a.m. on the ninth day ahead of the delivery day and closes at 9:15 a.m. on the day preceding the delivery day, with the outcomes published by 10:45 a.m. on the day preceding the delivery day. It is an energy market. Bids are accepted after the close of the market session, on the basis of economic merit and in respect of the transit limits between zones. It is therefore an auction market, and not a continuous trading market. The sale bids accepted are priced at the equilibrium price of the specific zone to which they belong, for every hour, by the intersection of the demand-supply curve, and are differentiated on the basis of the zones. The zonal price is applied for the remuneration of the producers. The purchase bids accepted are instead valued at the National Single Price (PUN), which is equal to the weighted average of the zonal prices for zonal consumption, and this ensures the same conditions to all final customers, regardless of their geographic positioning. The GME acts as the central counterparty.

Infra-day market (MI)

This market is the venue for the trading of the electricity purchase and sale bids for every hour of the next day, for the purpose of modifying the injection and withdrawal programmes defined on the MGP. The bids are accepted by GME based on merit, on a basis compatible with the respect of the MGP’s residual downstream transit limits. If accepted, the bids are remunerated at the zonal equilibrium price. The bids accepted modify the preliminary programmes and result in updated injection and withdrawal programmes for each point of supply for the next day. Participation is optional.

Dispatch service market (MSD)

The market is the venue for the trading of bids for the sale and purchase of dispatch services.  Terna uses this market for resolution of intra-zonal congestion, the sourcing of reserves, and the real-time balancing between injections and withdrawals. Market participants are limited to:  authorised suppliers of dispatch services, and related users of dispatch services, the only entities authorised to present bids. Participation in the MSD is obligatory. The MSD yields two distinct outcomes: 1) the first outcome (MSD ex-ante) related to the bids accepted by Terna S.p.A. to programmes, for the purpose of resolving congestion and setting up of an adequate reserve margin; and 2) the second outcome (MSD ex-post) related to the real-time bids accepted by Terna S.p.A. (through the sending of balancing orders) for the purpose of the balancing between injections and withdrawals. The bids accepted on the MSD determine the final injection and withdrawal programmes for each point of supply. The bids on the MSD are accepted based on economic merit, on a basis compatible with the needs to ensure the proper running of the electricity system. The bids accepted on the MSD are valued at the price offered.