Market participants who desire to purchase power via Nord Pool's Elspot marketplace must submit their bids to Nord Pool no later than 12 noon the day before they desire delivery. Correspondingly, the market participants who desire to sell power via Elspot must send their bids to Nord Pool the day before they desire to make delivery.
A power company can for example submit a bid to buy or sell to Nord Pool for the hour between 1 and 2 p.m. the following day.
The power company can decide whether it wants to:
buy all its power on the market and thus save the water in its own reservoirs
buy some power on the market and generate the rest itself
generate precisely the power required to meet the customers' expected consumption during this hour
generate more power than their customers' expected consumption and sell thus power on the market
Supply and demand curve for the power company for the hour between 1 and 2 p.m.
The power company reports to the exchange that it wants to purchase 50 MWh during the hour between 1 and 2 p.m. the following day, if the exchange price is NOK 0.10/kWh or lower.
If the exchange price is NOK 0.15/kWh, then the power company wants to buy 10 MWh. The power company will generate the remaining 40 MWh from its own power stations.
The power company wants to sell 10 MWh if the price is NOK 0.175 /kWh. If the price is NOK 0.20/kWh or higher, then the power company wants to sell 30 MWh.
The bids to buy and sell for each hour the following day are compiled by Nord Pool into an overall curve for the demand and an overall curve for the supply. The system price is read from where the two curves intersect.
Calculation of the system price for the hour between 1 and 2 p.m.
Nord Pool sets a system price for each hour during the following day. The price can vary from hour to hour, but it is fixed for one hour at a time.
When Nord Pool has made its calculations, it releases the prices for the following day and tells the market participants how much power they have purchased or sold for the various hours of the following day, and the transmission system operators are notified of the contracted purchase and sales volumes. This can be entered then in the balance accounting for various market participants.