Day Ahead Market

The Day-Ahead Market (DAM) is an important segment of the electricity exchange market. It is a market where participants buy and sell electricity for delivery on the next day.

What is the Day-Ahead Market? 

It is a spot market, which means transactions concern a commodity (in this case, energy) with a very short delivery term (for the following day). The Polish DAM is part of the Single Day-Ahead Coupling (SDAC), which enables cross-border energy trading and optimizes energy flows in Europe.

How does the DAM work?

Trading takes place in the form of daily auctions (so-called fixings), organized in Poland by the Polish Power Exchange (Towarowa Giełda Energii - TGE). Market participants (e.g., power plants, large factories, trading companies) submit bids to buy or offers to sell electricity for each hour of the next day. Based on all submitted offers, a single market price (clearing price) is determined for each hour separately. This price balances supply and demand.

For whom is the Day-Ahead Market?

DAM participants are primarily energy producers, industrial consumers, and energy trading companies.

Purpose and Significance of the DAM.

• Balancing. It allows producers to sell surplus energy they have not previously contracted and enables consumers to purchase missing energy.
• Price Setting. The prices established on the DAM (especially the TGeBase index) are the main reference point for energy prices in the entire economy, including in long-term contracts.
• Efficiency. It enables effective management of energy production and consumption by reacting to current forecasts (e.g., weather forecasts, which affect production from RES - Renewable Energy Sources).

For individual consumers, the Day-Ahead Market has gained importance with the introduction of the net-billing system for prosumers and the emergence of dynamic tariffs. In these models, the price at which prosumers sell surplus electricity or at which consumers buy energy is directly linked to the hourly rates on the DAM.