Nord Pool uses piecewise curves where two consecutive points on a curve cannot have the same price. We use linear interpolation to interpret the curve points to model the linear relationship that exists between price and volume. For every price-volume pair a linear curve segment is created.

Single periodic orders need to be defined with at least two price steps, minimum price (EUR -500) and maximum price (EUR 4000). Price independent orders are orders where buy or sell volume will be placed at the minimum and maximum price steps for all the intended periods. The member will receive a schedule of delivery equal to the specified volume for this period, regardless of the price level.

Single periodic orders can also be defined with several price steps; these orders are called price dependent orders. Members who submit price dependent orders, accept that Nord Pool will make a linear interpolation of volumes between adjacent pair of submitted price steps to find the correct traded volume for that member. 

Example of a price independent order (96 quarters)

In this example, the participant wants to buy 70 MW in all individual quarters 01-96 at any price between -500 EUR/MWh and 4000 EUR/MWh.

Price Quarter		-500	4 000
01		70	70
02		70	70
03		70	70
:
96		70	70

Example of a price dependent order

In this example the participant wants to trade different volume in each quarter depending on price. 

In quarter 01, the participant wants to buy 50 MW at any price between -500 and 50 and to sell -10 MW at prices between 55,1 and 60 and -30 MW between 60,1 and 4000. Should the price become 55,05 Euro, the traded volume will be -5 MW due to linear interpolation. 

Price Quarter		-500	50	50.1	55	55.1	60	60.1	4 000
01		50	50	0	0	-10	-10	-30	-30
02		100	70	0	0	-50	-50	-100	-100
03		150	50	0	0	-10	-10	-30	-30
:		:	:	:	:	:	:	:	:
96		170	100	0	0	-5	-5	-30	-30

In Nord Pool bidding areas, linear interpolation is used to interpret the curve points and model the linear relationship between price and volume. For every price-volume pair, a linear curve segment is created.

How to avoid linear interpolation

Assume that the first picture below is your bid and that we are examining Price Quarter 01. Linear interpolations occur between the price step 20 EUR/MWh with sell volume 0 MW and price step 450 EUR/MWh with sell volume of 20 MW. In this example, assume that the actual price for the given hour was calculated to 80 EUR/MWh, meaning that linear interpolation was used to determine the corresponding volume at this given price between the mentioned price steps.

Your bid:

Price		-500	0	20	450	4 000
Quarter
01		0	0	0	-20	-20
02		0	0	0	-20	-20
03		0	0	0	-20	-20
:		0	0	0	-20	-20
96		0	0	0	-20	-20

 

Assume that if you don't want to sell any volume for a price lower than 450 EUR/MWh, you need to add another price step as indicated in the picture below to ensure that linear interpolation will not occur between price step 20 EUR/MWh and 450 EUR/MWh.

Price		-500	0	20	450	450,01	4 000
Quarter
1		0	0	0	0	-20	-20
2		0	0	0	0	-20	-20
3		0	0	0	0	-20	-20
:		0	0	0	0	-20	-20
96		0	0	0	0	-20	-20