N-SIDE and SKM bring flow-based optimization to Nordic–Baltic EPAD auctions

A new cross-border auction service will expand long-term hedging opportunities between Sweden and Lithuania.

Electricity Price Area Differentials (EPAD)

There are futures contracts that help market participants hedge the difference between a bidding zone’s electricity price and the Nordic system price.

What N-SIDE does?

Svenska kraftnät and Litgrid have jointly appointed Svensk Kraftmäkling (SKM) and N-SIDE as Auction Operator for a new EPAD auction service spanning Sweden’s four bidding zones and Lithuania’s Vilnius zone. The service marks the first cross-border coupling of EPAD products between the Nordic and Baltic power markets.

SKM will manage auction operations, participant support and publication of results. N-SIDE will provide the matching algorithm, which determines auction prices and allocated volumes.

By linking EPAD purchases in one bidding zone with sales in another, the auctions enable hedging of price differences between zones, economically comparable to Financial Transmission Rights (FTR obligations). The flow-based design accounts for shared network constraints when allocating volumes. This approach reflects a broader European move towards flow-based allocation of long-term transmission rights, supported by ACER’s changes to the allocation framework.

Auctions are expected to take place every two weeks, offering monthly, quarterly and yearly contracts. The service is expected to launch in late 2026, giving market participants new ways to hedge electricity price differences across the region.