Day-ahead market
A wholesale electricity auction held the day before delivery that sets hourly or quarter-hourly prices and schedules for the following day.
The day-ahead market is the main wholesale spot market in most liberalised power systems. Generators submit sell offers and suppliers or large consumers submit buy bids for each delivery period of the next day; an algorithm clears supply and demand to determine prices and accepted volumes, following the merit order.
In Europe, the Single Day-Ahead Coupling (SDAC) closes at 12:00 CET and uses the EUPHEMIA algorithm to clear most EU countries plus Norway simultaneously, allocating cross-border interconnector capacity implicitly, increasingly through flow-based market coupling. In October 2025 SDAC moved from hourly to 15-minute products. Exchanges include EPEX SPOT, Nord Pool, OMIE and GME.
In the United States, ISOs such as PJM, CAISO, ERCOT and MISO run day-ahead markets with locational marginal pricing (LMP), calculating a price at each node:
After the day-ahead auction, participants adjust positions in the intraday market, continuous or auction-based up to minutes before delivery, and residual imbalances are settled in the balancing market. Day-ahead prices serve as the reference for many CfDs, PPAs and dynamic retail tariffs, and frequently show negative prices at high renewable output.
Related terms
All terms →- Merit order
The ranking of power plants by ascending marginal cost, used to dispatch the cheapest units first and set the market clearing price.
- Negative electricity prices
Wholesale prices below zero, when generators pay to deliver power because inflexible supply exceeds demand.
- Interconnector
A transmission link, AC or HVDC, that connects the grids of two countries, regions or market zones and allows electricity to be traded between them.
- PPA (Power Purchase Agreement)
A long-term contract under which a buyer agrees to purchase electricity from a specific generator at a set price or price formula.
- Contract for Difference (CfD)
A support scheme or contract in which a generator receives the difference between a fixed strike price and a market reference price, paying back when prices exceed it.
- Demand response
Changes in electricity consumption by end users, in response to price signals or operator requests, to balance the grid.