Overview

The Wholesale Market is responsible for coordinating the continuous exchange of electrical energy between generators, storage resources and consumers.

Its purpose is to ensure that electricity is produced where and when it is needed while recovering the variable costs associated with supplying that energy.

Within FP-AMM, the Wholesale Market is not a sequence of isolated auctions.

Instead, it operates as a continuously clearing market in which prices, allocations and dispatch decisions evolve as new information becomes available.

The objective is to coordinate the physical operation of the electricity system while providing efficient economic signals for both producers and consumers.

Purpose

The Wholesale Market performs three fundamental functions.

Match energy supply with energy demand.
Establish prices that reflect current system conditions.
Coordinate the operation of distributed energy resources across the electricity network.

It does not recover every cost associated with operating the electricity system.

Long-term investment, network infrastructure and consumer service obligations are addressed through separate market layers.

From Static Bids to Dynamic Participation

Traditional wholesale electricity markets were designed around relatively small numbers of large power stations.

Participants submit bids for predefined settlement periods, typically specifying a quantity of energy and an associated price for each market interval. Once gate closure has passed, these commitments remain largely fixed until the next settlement period.

This approach suited conventional electricity systems, where large thermal generators could accurately predict their output hours in advance.

FP-AMM adopts a fundamentally different model.

Rather than asking participants to commit to fixed half-hourly schedules, the market continuously asks a simpler question:

What is your resource capable of doing from this moment onwards?

Participation therefore becomes a continuously evolving description of physical capability rather than a sequence of static contractual commitments.

Capability Declarations

Generators no longer submit static bids for individual settlement periods.

Instead, they continuously publish Capability Declarations describing the operational capability of their resource.

A Capability Declaration may include:

current operating point,
maximum available output,
minimum stable generation,
ramp-up rate,
ramp-down rate,
operating constraints,
expected availability horizon,
offer price,
technical limitations.

Whenever the operating state of the resource changes, the declaration can be updated immediately.

The market therefore always operates using the most recent information available.

Continuous Availability

Rather than asking:

"How much energy will you generate during the next half-hour?"

FP-AMM asks:

"What are you capable of supplying now, and how is that capability expected to evolve?"

For example, a wind farm might declare:

current output of 180 MW,
maximum available output of 240 MW,
limited upward capability due to current wind conditions,
expected availability over the next several hours.

A gas turbine might instead declare:

current operating level,
available headroom,
ramp rate,
minimum run time,
fuel constraints.

Similarly, a battery may continuously update:

state of charge,
charging capability,
discharging capability,
power limits,
expected future flexibility.

Every participant therefore communicates capability rather than committing to fixed production blocks.

Continuous Market Operation

Because participant capability changes continuously, the market itself also operates continuously.

Every update to a Capability Declaration becomes new information available to the Automatic Market Maker.

Rather than waiting for the next market interval, the market immediately incorporates these updates into:

energy prices,
dispatch decisions,
resource allocations,
forward system expectations.

The result is a continuously adapting market that remains closely aligned with the physical state of the electricity system.

Price Formation

Prices emerge from the interaction between supply and demand.

When supply exceeds demand, prices fall.

When demand exceeds available supply, prices rise.

The Automatic Market Maker continuously updates prices as participant capability changes, allowing price to act as a distributed coordination signal across millions of participating resources.

Rather than representing a static settlement calculation, prices become part of the real-time control architecture of the electricity system.

Physical Feasibility

Economic efficiency alone is insufficient.

Every market outcome must satisfy the physical constraints of the electricity network.

The Automatic Market Maker therefore considers:

transmission capacity,
distribution capacity,
thermal limits,
voltage constraints,
transformer ratings,
operational security,
network congestion.

Only physically feasible allocations can be accepted.

The Wholesale Market therefore coordinates both economic efficiency and engineering feasibility simultaneously.

Interaction with Service Levels

Price is the preferred mechanism for balancing supply and demand.

Most changes in system conditions should therefore be resolved through normal market responses.

However, price alone cannot guarantee consumer reliability.

Retail Service Levels define the contractual reliability purchased by consumers.

When scarcity remains after economically efficient market clearing, the Fair Play mechanism allocates any unavoidable shortage in a manner that respects these contractual commitments.

The Wholesale Market therefore determines prices.

Service Levels determine reliability.

Fair Play determines how unavoidable shortages are shared.

Recovery of Variable Costs

The Wholesale Market is responsible for recovering the variable costs associated with supplying electrical energy.

These include:

fuel costs,
variable operating costs,
short-run production costs,
other costs directly associated with energy production.

Recovering these costs through wholesale energy prices maintains a clear relationship between operational expenditure and market revenues.

Long-term capital investment is recovered separately through the Capacity and Availability layer.

Separating these economic functions improves transparency while ensuring that fundamentally different categories of cost are recovered through appropriate mechanisms.

Interaction with Other Market Layers

The Wholesale Market forms one part of the overall FP-AMM economic architecture.

Its outputs influence every other market layer.

Wholesale prices influence retail tariffs.

Retail demand influences wholesale market behaviour.

Capacity payments influence long-term investment.

Network constraints influence feasible dispatch.

Each market performs a distinct economic function while operating as part of a coordinated whole.

Relationship to the Automatic Market Maker

The Automatic Market Maker provides the coordination mechanism through which the Wholesale Market operates.

It continuously:

receives Capability Declarations,
evaluates physical feasibility,
updates market prices,
allocates energy,
coordinates dispatch,
maintains system balance.

The Wholesale Market defines the economic purpose.

The Automatic Market Maker provides the operational mechanism.

Benefits

Representing market participation through continuously updated Capability Declarations provides several advantages.

Market information remains aligned with the current physical state of the system.
Renewable generation naturally reflects changing weather conditions.
Flexible resources continuously advertise changing capability.
Ramp-rate limitations become explicit rather than implicit.
Dispatch becomes smoother as operating envelopes evolve continuously.
Forward expectations are continuously refined rather than periodically replaced.
The market naturally supports millions of distributed energy resources without relying on rigid settlement intervals.

Rather than repeatedly committing to fixed schedules, participants continuously communicate what their assets are capable of doing, allowing the market to coordinate the electricity system using the most up-to-date information available.

Summary

Within FP-AMM, the Wholesale Market is responsible for coordinating the continuous exchange of electrical energy.

Its role is to recover the variable costs of supplying energy while providing efficient price signals that balance supply and demand in real time.

Unlike conventional wholesale markets based on static half-hourly bids, participants continuously describe the operational capability of their resources through Capability Declarations. The Automatic Market Maker continuously integrates these declarations into market clearing, allowing prices, allocations and dispatch to evolve naturally as system conditions change.

Long-term investment, consumer reliability and network cost recovery are addressed through separate market layers, allowing each part of the electricity system to perform a clearly defined economic function while operating as part of a coherent whole.