Shift from 1-Hour to 15-Minute Resolution in the Day-Ahead Market

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Closer Alignment with Renewable Production Profiles

With the introduction of a 15-minute resolution in the Day-Ahead market, the bidding structure will transition from a rigid hourly system to a more dynamic model that better reflects real-world conditions. This change is especially significant for renewable energy producers, whose generation is inherently more variable. The new structure allows bids to more accurately match the actual generation profiles of wind and solar assets, which are influenced by rapidly changing weather conditions. Instead of being constrained to 1-hour blocks, producers can now align their bids more closely with short-term forecasts, giving a better integration of renewables.

• Positive impact: Improved integration of renewables, reduced structural imbalances, and more precise market operations, which enhance the possibility of collaborations with batteries.
   
• Challenge: Initial uncertainty, more bidding activity each day, requiring additional operational resources and more accurate forecasting capabilities.

Impacts on Ancillary Services and Imbalance Markets

The new transition of the DA market will not require structural changes to the imbalance market or AS. The biggest impact is that forecast deviations within these shorter intervals become more visible. Rapid weather shifts, especially affecting renewables generation, can lead to unexpected shortages or surpluses within a single 15-minute block, increasing the need for corrective actions through the imbalance market and a greater reliance on AS. 

For producers participating in AS, the introduction of the new regulation may bring initial uncertainty and fluctuations in the market's revenues. During the early adaptation phase, larger imbalances and price peaks might occur, as it was observed when the imbalance settlement period shifted to 15-minute resolution in the Nordics. Whether revenues increase or decrease will largely depend on how effectively producers adapt to participating in these evolving market structures. However, in the long term, overall revenues from both Ancillary Services and imbalance settlements are expected to stabilise.

Impact on PPAs and Route-to-market Agreements

The introduction of 15-minute settlement transactions, designed to enhance renewable integration, directly affects renewable generators’ ability to capture market prices. Greater volume precision reduces the capture price, as market outcomes now more accurately reflect the aggregated renewable output.

Figures 1 and 2 show how shifts in Day-Ahead market resolution can influence capture prices. A difference of roughly €2 is observed, which may impact the profitability of PPAs.

For renewable generators with Power Purchase Agreements (PPAs) – particularly solar PPAs, it is essential to carefully review how settlement clauses are defined. Depending on the contract structure, the financial implications could be significant. For example, if calculation periods are set hourly, revenues may diverge from theoretical settlement values, since market payments are now determined on a 15-minute basis. In such cases, invoking a change-in-law clause may be necessary to adjust terms and mitigate potential revenue deviations arising from this transition. 

On the other hand, for Route-to-Market agreements, the shift to 15-minute settlement may also influence the evolution of imbalance prices. If this factor was not accounted for at the time of signing, particularly in longer-term BRP contracts, the parties may invoke a change-in-law clause, depending on the extent of the impact on imbalance markets. This could provide grounds for renegotiating BRP contracts that have become unprofitable due to the recent rise in imbalance costs across Europe.

Generators should closely monitor imbalance price developments to strengthen their position in disputing any change-in-law claims and to ensure they are not exposed to unfavourable contract revisions.

Operational Investments and Resource Demands

For a full commitment to this change, producers should also anticipate potential future investments. The new regime brings higher operational intensity, where forecasting accuracy becomes even more critical, as it directly impacts financial results in the market. As a result, the selection of the market agent becomes critical, since the quality of forecasting algorithms will significantly influence a producer’s ability to capture market value. Production forecasts may require upgrades or modifications, while metering and measurement systems might need adjustments to ensure timely and detailed data for improved optimisation of the real production profile. Beyond technical upgrades, additional resources must be allocated to handle the greater number of daily bids, reducing the risk of errors and missed opportunities.  These requirements might place a heavier burden on smaller producers, while larger market agents are generally better equipped to absorb the associated costs.

Conclusion

This change is aimed at creating a more efficient and flexible market in the long run, but in the beginning it will bring uncertainty and unpredictability, as participants test different approaches. Over time, the shift to 15-minute bidding will strengthen renewable integration by aligning market schedules more closely with real production. For producers, the impact will depend on their readiness: active participation in Ancillary Services, timely investments, resource allocation, and careful management of PPA renegotiations or potential terminations will all be key.