"E" as in Electricity Market

The electricity market is the virtual space where electricity is purchased and sold wholesale. It is a crucial element of the electricity system and – as for any other free market – is based on the law of supply and demand. The final aim is to arrive at the best price to balance the needs of producers with those of consumers.

In Italy, the electricity market is relatively recent. Its birth dates back to 16 March 1999, when the Bersani decree – in accordance with European Union directives - liberalised the electricity sector in Italy.

Market Structure The electricity market is divided into two main sectors:

1. The Energy Market, itself divided into:

Day-Ahead Market (MGP)

Intra-Day Market (MI)

2. Dispatching Services Market (MSD), itself divided into:

The programming phase, or “ex-ante MSD”

The real-time phase, or Balancing Market (“MB”)

Energy Market Operators The Italian energy market is governed by the Gestore dei Mercati Energetici (GME - Energy Market Manager), controlled by the Italian Ministry of Economy through the Gestore dei Servizi Energetici (GSE - Energy Service Manager). The GME establishes the rules that operators must follow in order to participate in the energy markets. Before coming into force, however, the standards set by the Manager must be submitted to the Italian Ministry of Economic Development (MISE), which approves them after hearing the opinion of the Italian Regulatory Authority for Energy, Networks and Environment (ARERA).

In the energy market, the wholesale purchase and sale of electricity takes place between producers, wholesalers and end clients. These exchanges – which are regulated by the GME – establish the price of electricity (but not the price of bills, which in addition to the energy element also include other items and taxes). The protagonists in such exchanges include Single Buyers (AU), i.e. public companies that buy electricity for domestic customers and for small and medium-sized enterprises that have not yet switched to a free market.

The role of Terna. Terna is involved in the Dispatching Services Market, where it contracts the energy required for grid control and management operations, the most important of which are the real-time balancing of the system, the creation of energy reserves and congestion resolution.

The objectives of the European Union. The European Union aims to create an integrated electricity market. To achieve such goal, mechanisms have been created to make the exchange of electricity between states more efficient (“market coupling”), but also European grid codes that harmonise the rules of the electricity markets in the 27 countries in the EU.