A block order is particularly useful for example if the participant wants to run a power station for a longer period than one hour and wish to minimise costs related to start and stop. 

Regular block orders

Regular block orders have an “all-or-nothing” condition. They must be fully accepted or fully rejected, and if accepted, the contract covers all hours and volume specified. Regular block orders are the type of blocks that are most frequently used.

For regular block orders, the price is compared with the average day-ahead price for the hours to which the block order applies. Acceptance criteria are: 

Sale blocks

• If the order price of a sales block is lower than the average day-ahead area price during the specified block period, then the block will be fully accepted (unless paradoxically rejected).
• If the order price of a sales block is higher than the average day-ahead area price during the specified block period, then the block will be fully rejected.
• If the order price of a sales block is exactly the average day-ahead area price during the specified block period, then the block can either be fully accepted or fully rejected.

Purchase blocks

• If the order price of a purchase block is higher than the average day-ahead area price during the specified block period, then the block will be fully accepted (unless paradoxically rejected).
• If the order price of a purchase block is lower than the average day-ahead area price during the specified block period, then the block will be fully rejected.
• If the order price of a purchase block is exactly the average day-ahead area price during the specified block period, then the block can either be fully accepted or fully rejected.

Linked block orders

Block orders can be linked together, i.e. the acceptance of an individual block order can be made dependent on the acceptance of other block orders.

Example of practical uses for linked blocks: There might be high cost of start-up and/or stop of production. Once these costs are covered the producer can produce at a low marginal cost. The producer can therefore price the Mother block high to cover the start and stop cost, then price child blocks low to include the extra volume with low marginal cost. The child blocks can then only be accepted if the Mother (covering the start and stop cost) is accepted.

A is the parent, B the child, and C the grandchild.

• It is not possible to link blocks across bidding portfolios or areas, i.e. all linked blocks need to be connected to one bidding portfolio in one bidding area.
• A child order (B) can only be linked to one parent order (A).
• A grandchild (C) order can only be linked to one child order (B).
• A block order cannot be linked to a flexi order or vice versa.
• Order A, B and C can span any set of hours independent of each other.
• Order A, B and C can have any order price independent of each other.
• The number of link levels must not exceed three.
• Circular link chains are not allowed, i.e. order C is linked to Order B that is linked to Order A that is linked to order C.
• The acceptance ratio of a parent block is greater than or equal to the highest acceptance ratio of its child blocks (acceptance ratio of a child block can be at most the lowest acceptance ratio among own parent blocks)
• A child block cannot be accepted without its parent being accepted.
•  (Possibly partial) acceptance of child blocks can allow the acceptance of the parent block when:
  • the surplus of a family is non-negative
  • leaf blocks (block order without child blocks) do not generate welfare loss

• A parent block which is out-of-the-money can be accepted in case its accepted child blocks provide sufficient surplus to at least compensate the loss of the parent.
• A child block which is out-of-the-money cannot be accepted even if its accepted parent provides sufficient surplus to compensate the loss of the child, unless the child block is in turn parent of other blocks (in which case rule above applies).

Curtailable block orders

Curtailable block orders are those which can be partially accepted according to a user-defined Minimum Acceptance Ratio (MAR). A block with MAR=1 (100%) is a regular all-or-nothing block order, so it is either fully accepted or fully rejected.

A block with MAR=0.5 (50%) may be curtailed up to 50%. A block with MAR=0 (0%) is fully curtailable. MAR is always same for all hours. Curtailable blocks can be linked.

Profile block orders

A profile block is a block order where volume can differ over the entire time span of the block. The minimum order duration is three hours in Nordic and Baltic regions, two in the UK and one in CWE. The start and stop time of a profile block order is defined by the user. Profile block orders can be linked and they may be curtailable (with same Minimum Acceptance Ratio applying for all periods).

The volume weighted average price over the duration of the order is used to determine its acceptance. The price is compared with the block volume weighted average day-ahead price for the periods for which the block is defined.

Note: It is not possible to have both buy and sell volumes in the same block.

Example

Block Order	Price	Period	Volume
Sell block A	EUR 40	1-7	80MW
Sell block A	EUR 40	8-16	220MW

Example screenshot from our web platform with block orders, Minimum Acceptance Ratio and linking.

Example template for entering block orders, Minimum Acceptance Ratio and linking.

 

Handling of block orders

A regular block order is an order with two characteristics. First, a block order refers to more than one hour, and second, a block order is either to be accepted or not accepted as a whole. 

However, this “all-or-nothing” condition requires binary acceptance variables because fractional acceptance is not tolerated for regular block orders.

The main idea is to choose a combination of block orders that maximises social welfare. However, sometimes the block bidder can experience a loss relative to the resulting spot prices, i.e. block orders that have the accepted price level are not accepted (paradoxically rejected block).

Matching of block orders in the price calculation

For sales orders with order prices that are far from the calculated prices,  sale orders with the lowest prices precede orders with higher prices. For order prices that are far from the calculated prices, purchase orders with the highest prices precede orders with lower prices.

If two block orders are identical, but only one can be accepted, selection is random.

It should be noted that if two block orders have the same price, the highest volume does not necessarily precede.

How to submit block bids

• 3 ways to submit and update block orders
• How to fill in block orders in Excel templates

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