Variants

There are three possible methods for coupling the power exchanges:

1. price coupling
2. tight volume coupling
3. loose volume coupling

The best quality of market coupling is achieved by means of a price coupling system. 'Price coupling'  is an arrangement whereby the market prices and traded volumes are calculated by a single centralised system on the basis of all the relevant information (i.e. the amount of cross border capacity and the order books of all energy exchanges and TSOs in the coupled region). An example of such an arrangement is the current Trilateral Market Coupling (TLC) system linking the markets of the Netherlands, Belgium and France. 'Tight volume coupling' is a system whereby the volume traded between countries or regions is determined before the individual energy exchanges calculate their own prices. ‘Tight’ in this context means that the volume traded is calculated on the basis of all relevant information, as in the price coupling system. Tight volume coupling offers almost the same quality level as price coupling, and is a very acceptable market coupling system. 'Loose volume coupling' offers the lowest quality level. In this variant, the volume traded between two countries or regions is calculated and then the prices are calculated separately. The difference with tight volume coupling is that the calculation is performed using just some of the relevant information, hence the lower quality level.