Spot market (EPEX Spot)


The EPEX spot market is a European electricity market on which short-term electricity supply contracts, also known as spot contracts, are traded. EPEX stands for “European Power Exchange” and is headquartered in Paris. The spot market allows electrical energy to be traded directly, with the energy delivered 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 react quickly to changes in electricity demand and supply. It plays an important role in pricing for electrical energy and helps to ensure security of supply and the balance between supply and demand on the European electricity market.

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

The EPEX spot market is subject to strict regulatory and supervisory requirements to ensure market fairness, transparency and integrity.

How does the spot market work?

In contrast to the futures market (EEX Leipzig), short-term quantities of electricity are traded on the EPEX spot market in Paris. These are either sold one day in advance in day-ahead trading or the same day in intraday trading. Trading is in megawatt hours (MWh). In 2022, around 616 terawatt hours of electricity were traded on the spot market.

Day-ahead market and intraday trading

At the EPEX spot, participants can quickly compensate for both excess and shortfalls in ordered amounts of electricity. 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. Both electricity buyers and electricity sellers submit their bids for the next day no later than 12:00 on the previous day. The price of electricity is formed by the daily submission of bids from stock exchange members for the auction the following day. It results from the interface of supply and demand and is also known as the market clearing price. As soon as two bids agree, the electricity is delivered at the agreed price. In addition to offers for electricity quantities per full hour, block bids are also traded, for example for energy-intensive morning hours.

Intraday trading: In intraday trading, on the other hand, electricity is traded continuously. Here, the required amounts of electricity can be precisely adjusted. As a result, any shortfalls or surpluses following day-ahead trading can be corrected. In recent years, the time period for same-day electricity trading has steadily shortened. In Germany, it is even possible to make transactions up to five minutes before the start of electricity delivery. Intraday trading for 15-minute bids starts at 15:00 the previous day.

In addition to the different trading periods, day-ahead trading and intraday trading also differ significantly in pricing. While day-ahead trading is based on the concept of market-clearing pricing, in which the last accepted offer price determines the price for all transactions, the price is set in continuous intraday trading at EPEX using the so-called “pay-as-bid” process. This always calculates the price that was accepted for each individual transaction, resulting in bid prices. As a result, there are no uniform prices for the respective products. Depending on the time of trade, there may be different prices for the same product.

Spot market price effects

Spot market prices can be influenced by a variety of factors. They are therefore exposed to high levels of volatility. Fluctuations in generation output, weather conditions (in particular due to the increasing share of renewable energy in the electricity mix), consumer behavior, supply fluctuations due to supply chains or production patterns, but also market events such as natural disasters, political or economic developments can have a direct impact on prices.