The Forward Physical Market (FPM) is open for market participants for trade of monthly and weekly products. The market is based on physical delivery of the traded power volume.The objective of the market is to facilitate trading of longer term physical contracts;
Bilateral contracts will also be a part of the participant’s total power commitments, but the FPM will give the participants more flexibility in the planning phase and secure prices for power deliveries to follow the price level in the market on a medium term.
The Forward Physical Market (FPM) is an auction-trading model just as the Day-Ahead Market. This means a single calculation based on the collection of all orders and determining a balance price between production and consumption. The balance price is valid for all trades and calculation of the participants’ schedules in the market.
The auction model is run on a trading day for the participant’s physical delivery of the traded volume in the next delivery period. In the FPM the delivery period is the next month for the monthly product and next week for the weekly products and the trading period resolution is per hour.
The auction model is a fully transparent trading methodology where participants submit orders that are seen only by the Power Exchange and the submitting participant (as well as monitored by the relevant authorities).
The principle of the FPM is that all participants trade on equal terms and that they have a physical grid point in a given market area for delivery of production or withdrawal of consumption. As for the DAM this requires an agreement with the national Transmission System Operator – TSO and a Balance Responsible party, responsible for the participants portfolio balance in the physical grid point (area).
The FPM determines a system price and an area price. The system price is calculated assuming no grid congestion, and is the unconstrained price calculated. If the contractual flow of power between the pre-defined areas exceeds the transmission capacity available for FPM contracts on these connections, grid congestion occurs and separate areas prices are created (“market splitting”).
Prices are determined with a one price for all hours in the FPM products.
The FPM is based on the same auction-trading model as used for the Day-Ahead Market. The only difference between the two markets is definition of the products available for trading.