Market coupling

Planning our electric future: a White Paper for secure, affordable and low-carbon electricity, Glossary, published by the Department of Energy & Climate Change on 14 July 2011, defines market coupling as: ‘An approach used to allocate capacity on interconnectors. It links interconnected wholesale energy markets with an implicit auction that determines efficient cross-border flows according to price differentials between markets. Under market coupling, power flows from low to high price areas. This approach for allocation of cross-border capacity is endorsed by the European Commission.’

Where interconnection refers to the: ‘Physical linking of a network with electricity generation, usually between countries which allow electricity to be imported and exported in response to price signals.’

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