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Quantitative Finance · Glossary

What is Market coupling?

Definition 5.5 Markets III: Commodities, Energy and Crypto · Chapter 5 — Power Markets I: Design

Market coupling is the joint clearing of the day-ahead auctions of several zones by one algorithm, which allocates the cross-border transmission capacity implicitly: electricity flows from the low-price zone to the high-price zone until prices converge or the capacity is used up.

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