(When) Should We Go for a 5-minute Temporal Granularity in European Intraday Markets?

This paper discusses market-oriented measures to cope with the increased ramping caused by the high penetration of variable renewable energy sources. We propose introducing a finer temporal granularity of 5 minutes in the European electricity markets, particularly for intraday continuous trading. Today, the EU is moving towards a harmonized 15-minute granularity for the market time unit and the imbalance settlement period. However, transmission system operators are still responsible for deviations within these 15 minutes. A transition to a 5-minute granularity aligns generation and consumption more precisely, significantly reducing systematic system imbalances and the need for additional balancing services. Anticipating a major shift in electricity generation by 2030 and 2050, this paper underscores the urgent need for such market adaptations to ensure system efficiency, sustainability, and reliability. We evaluate the potential benefits, but also discuss the challenges that arise from reducing this temporal granularity. These challenges include necessary modifications in balancing mechanisms, impacts on future electricity generation mixes, and effects on market parties.