Market Products

Seasonal Availability

For markets where there is a known baseline need for flexibility valid over an extended period, the network owner (DSO) can use the "Seasonal Availability" (SA) product to procure resources well in advance for activation during peak load hours. This product suits providers (FSPs) who can reserve capacity in exchange for predictable compensation.

The process in SWITCH is as follows:

1

Tender Created

The DSO specifies the procurement characteristics for SA in SWITCH (quantity need, remuneration level, time period, etc.)

2

Tender Opens for Offers

At the specified time, the tender opens, and participating FSPs are notified via email

3

FSP Submits Offers

During the tender period, FSPs can submit offers for qualified flexible resources, either for the full quantity or a portion of the DSO’s need

4

Clearing of Availability

At the specified time, the tender closes, and offers are evaluated by SWITCH, with allocation based on the lowest activation price per flexibility quantity

5

Order Schedule Created

Based on the allocation, SWITCH generates a schedule for flexible resources with fixed quantities and activation prices

6

Market Starts

During the period the order schedule is valid, flexibility orders are created for the market, which the DSO can activate as needed (manually or automatically)

7

FSP Delivers Flexibility

For activation the day before or intraday, the FSP is notified via email and SMS to prepare their delivery

8

Settlement

After the end time of the schedule period is reached, availability remuneration can be calculated for participating FSPs

All steps in the process can be tracked by the DSO and FSP directly in the SWITCH web interface or via API.

The DSO has the ability to customize when and how long the procurement remains open. To accommodate flexible resources that can be available all hours but only deliver for a shorter duration, endurance and cooldown are managed. Endurance refers to the consecutive hours a resource can deliver flexibility, while cooldown is the number of hours the resource needs before a new delivery can be performed.

Example:

The DSO requires availability during peak load hours every weekday morning from 07:00 to 11:00. Resource A has an endurance of one hour and a cooldown time of three hours but can be available for all four requested hours. Upon activation, the DSO can choose any hour within the period for delivery.

Availability Orders

For flexibility needs that can be estimated or forecasted a few days before the operational instance, the "Availability Orders" (AO) product is often well-suited. DSOs can create orders for the market manually or automatically (using load forecasts), and FSPs are notified and can submit bids. Since FSPs are expected to reserve capacity for up to a week before any potential activation of flexibility, a specific availability compensation is provided for each hour, in addition to activation compensation upon delivery.

The process in SWITCH is as follows:

1

Availability Orders Created

The DSO creates orders on the market with quantity needs and remuneration levels for availability, and participating FSPs are notified via email

2

FSP Creates Offers

During the order’s validity period, FSPs can submit offers for qualified flexible resources, either for the full quantity or a portion of the DSO’s need

3

Clearing of Availability

At the specified time, the tender closes, and offers are evaluated by SWITCH, with allocation based on the lowest activation price per flexibility quantity

4

Flexibility Orders Created

Based on the information in the DSO’s availability orders, SWITCH automatically generates corresponding flexibility orders, which can be activated as needed

5

FSP Delivers Flexibility

For activation the day before, the FSP is notified via email and SMS to prepare their delivery

6

Settlement

After delivery validation is performed in SWITCH, the DSO can calculate the total compensation that the FSP is entitled to

All steps in the process can be tracked by the DSO and FSP directly in the SWITCH web interface or via API.

Direct Orders

As a complement to "Availability Orders," DSOs can use "Direct Orders" (DO), which enable trading with shorter notice. Besides differences in trading windows, DO lacks availability remuneration. Instead, FSPs are compensated only for delivery with activation remuneration. Otherwise, the process is similar to that of AO.

SWITCH offers two variants of DO:

• Day-Ahead (DA) - Orders are created by the DSO a few hours before clearing and activation, which takes place on the morning of the day before delivery (simultaneously with other products with DA activation).

• Intraday (ID) - Orders are created by the DSO a few hours before clearing and activation, which occurs continuously from the afternoon of the day before delivery up to two hours before the operational instance.

Trading Time Points

Note that the times below may vary depending on adjustments the DSO chooses to make for the market. In the table, Month, Week, Day, Hour (M, W, D, H) are used to indicate proximity in time, where, for example, D-2 means two days before the delivery start.

Product	DSO Order	FSP Offer	Clearing	Activation
SA DA/ID	M-1	M-1 to W-2	W-2	D-1 09:30-10:30 or H-2
AO	D-7 to D-2 08:30	From order creation to D-2 10:00	Latest D-2 10:30	D-1 09:30-10:30
DO DA	D-2 10:30 to D-1 08:30	From order creation to D-1 09:00	D-1 09:30-10:30	D-1 09:30-10:30
DO ID	D-1 15:00 to H-4	From order creation to H-3	H-3	H-2

Compensation Models

After delivery is completed, validation and calculation are performed in SWITCH according to the models below.

Availability Remuneration

The level of availability compensation is set by the DSO per market and hour. Normally, the same hourly rate applies throughout the entire market period. For markets in a meshed power grid, an impact factor may need to be applied, which means that availability remuneration varies depending on the degree of electrical exchange between the flexibility resource and the procured point in the grid.

• An allocated order receives remuneration even if no activation occurs.

• An approved delivery of at least 75% grants full availability compensation.

• For an unapproved delivery, availability compensation is withheld.

For the SA product, additional adjustments may apply for endurance level (where shorter endurance results in lower remuneration) and failed deliveries (more than five unsuccessful activations result in a deduction from the total compensation for the availability period).

The preliminary calculation for maximum remuneration for an FSP resource is done using the following method:

Market availability remuneration in SEK * resource size in MW * impact factor * Df

Where Df (adjustment factor for endurance) is calculated according to the following formula:

$$0,5+(RE/E)∗0,5$$

RE: Resource Endurance, E: Endurance (for the tender). If endurance is not defined for the tender, Df is set to 1.

After the tender period ends the final availability remuneration can be calculated:

Average Delivery * ME

Up to 5 unsuccessful deliveries:

Average Delivery = ((Hours without activation * 100%) + (Hours of approved delivery * delivery quality %) + (Hours of unsuccessful delivery * 0%)) / Number of contracted availability hours for the period

More than 5 unsuccessful deliveries:

Average Delivery - Deduction

Deduction = (Number of unsuccessful deliveries - 5) / Number of activations (where 5 corresponds to the exclusion of the first 5 unsuccessful deliveries)

The deduction is applied as a percentage of the average delivery.

Activation Remuneration

FSPs choose their own compensation level for flexibility through offers. The lowest activation price wins according to the "pay-as-bid" principle. Bidding is hidden from the DSO and other FSPs.

• A minimum of 75% delivery is required to be considered an approved delivery.

• An approved delivery receives activation remuneration proportional to the percentage delivered.

• For an unapproved delivery, activation remuneration is withheld.

DIS - Dynamic Procurement System

To continuously recruit flexibility providers for flexibility markets and avoid the need to adhere to threshold values for direct procurement under LUF, E.ON applies a procurement method called Dynamic Procurement System (DIS). SWITCH is tailored to a specific trading flow to ensure compliance with the rules for establishing and procuring under a DIS. It is up to the network owner to decide the procurement form, and SWITCH can also be used with direct procurement or bilateral agreements.