1. Electricity trading Power exchanges in Europe

2. Contents Legislative framework Organization of the power market
Power exchanges
Future of power market

3. Legislative framework
AUTHORIZATION TO CONSTRUCT.
GENERATION
FREE COMPETITION
WHOLESALE MARKET
NATURAL MONOPOLY
TRANSMISSION
DISTRIBUTION
REGULATED TPA
PROTECTED CUSTOMER-REG. PRICE
SUPPLY
ELIGIBLE CUSTOMER

4. Organization of the power market
TSO
DSO
Power Exchange
Market operator
electricity flow
electricity payments
services payments
power exchange
contracts and payments

5. Organization of the power market - roles of operators
Bids processing and spot price determination
Trade settlements
Regulation energy settlement
Evaluation and settlement of differences
Statistics and balances
Transmission provision
Measurement
Management of the system
Transmission across the border
Organization of the ancillary service market
MARKET OPERATOR
Market organization
Evaluation and settlement (financial) of differences
SYSTEM OPERATOR
Technical operation and network management

6. Organization of the power market
Day ahead (spot) market
Market of regulatory energy (balancing)
Anciliary services market
Bilateral
contracts
Market of forwards
Intraday market
Continuous trading
Commodity exchange
Market operator (MO)
MO cooperating with OS
Operator of the system (OS)

7. Organization of the power market
Austria

8. Organization of the power market
Austria
Balance Group: BG
Balance Group Representative: BGR
Balance Group Coordinator: BGC
EGL
MAVIR
GRTN
ELES
A&B
BGC BG
BGR BG
BGR BG
BGR
APCS
BGC
EXAA
BG/BGR BG
BGR BG
BGR BG
BGR BG
BGR
EXAA
BG/BGR
EXAA
BG/BGR
Control Area
VKW
Control Area
TIRAG
Control Area
APG

9. Organization of the power market - power exchanges
UK POOL
NordPool
UKPX
IPE
APX UK
ENMO
ELEXON
APX
LPX
EEX
Gielda Energii
EEX
OTE
SPX
Powernext
EXAA
Borzen
OMEL
GME
OPCOM

10. The Nordic Power Exchange – Nord Pool
History:
Established in 1993, the oldest and the most respectful power exchange in Europe
The world’s first international commodity exchange for electric power
The main reason for power trade and exchange between Nordic Countries is the difference between power generation from hydro and thermal sources. The combination of power supplies is advantageous for all market participants.
Ownership
Nord Pool ASA
Statnett SF (Norway)
Svenska Kraftnaet SF (Sweden)
Fingrid Oyj (Finland)
Energinet.dk (Denmark)

11. The Nordic Power Exchange – Nord Pool
Structure
Nord Pool
Elspot
Elbas
Eltermin
Eloptions
Real time market
Clearing

12. The Nordic Power Exchange – Nord Pool
Geographical organization
Nord Pool
Nord Pool Odense
Denmark
Nord Pool Stockholm
Sweden
Nord Pool Oslo
Norway
EL-EX Helsinki
Finland

13. The Nordic Power Exchange – Nord Pool
Participants

14. The Nordic Power Exchange – Nord Pool
Markets in Nord Pool
The market for physical trading of electricity for delivery in the following day (day ahead hourly market)
hourly bids
block bids
The price is determined on the basis of the total quantity of electricity the participants announce that they will be buying and selling.
The system price is the balance price for the aggregate supply and demand curves.
Elspot determines the system price (reference price) both for the financial market and for the rest of the power market.
Elspot

15. The Nordic Power Exchange – Nord Pool
Markets in Nord Pool
Continuous physical market for balance purposes, i.e. trade in electricity up to one hour before delivery.
Available only to Swedish and Finnish participants, a supplement to Elspot.
Elbas

16. The Nordic Power Exchange – Nord Pool
Markets in Nord Pool
Financial market for price hedging and risk management when buying and selling electric power
The market consists of futures and forward contracts
Participants can hedge purchases and sales for up to three years
Eltermin

17. The Nordic Power Exchange – Nord Pool
Markets in Nord Pool
Eloptions is a part of Nord Pool’s financial market and is important instrument for risk management and for forecasting future income and costs related to trade in power contracts
Trade in power options gives the right to buy and sell an underlying instrument for a specific underlying period
Two types of options can be traded
European-style options
Asian-style options
Eloptions

18. The Nordic Power Exchange – Nord Pool
Elspot traded volumes
Increase of traded volumes, growth of trading territory
Norway
Sweden (liberalization in 1996)
Finland – 1998
Denmark – 2000

19. The Nordic Power Exchange – Nord Pool
Nord Pool traded volumes
200
400
600
800
1000
1200
2001
2000
1999
1998
1997
Traded volume in Nord Pool (TWh)
Elspot market
Financial market

20. The Nordic Power Exchange – Nord Pool
Nord Pool services
trading of balancing energy - system operator
Nord Pool claring house
power exchange contracts
bilateral contracts
Real time market
Clearing

21. Amsterdam Power Exchange Spotmarket B.V. – APX
Number of registered participants 39
Ownership
100% Tennet
APX characteristics
APX
Adjustment Market February 2001.
Day-Ahead Market
May 1999.
Adjustment market is designed to correct imbalances, which arise unexpectedly during the day due to variations in load or production. It is an extension of the current trading system based on auctions.
The Day-Ahead-Market is based on the two-side auction model. On the basis of the submitted bids demand and supply are compared on a daily basis. Classification in merit order along with matching, results in a price for every hour for delivery the next day.

22. Amsterdam Power Exchange Spotmarket B.V. – APX
APX traded volumes
% of national consumption
% of national consumption

23. European Energy Exchange AG – EEX
EEX characteristics
EEX
Spot Market
base load, peak load
blocks (June/August 2000)
Futures Market
(March 2001)
Financial clearing
Merger of European Energy Exchange AG, Frankfurt/Main and Leipzig Power Exchange GmbH, Leipzig in 2002
Number of registered participants
Spot Market 96
Futures Market 34
nine countries
Ownership structure
46,5% - Eurex (joint venture Deutsche Börse and SWX Swiss Exchange)
53,5% - 48 companies from 10 countries (Nordpool, Sachsen Landes Bank, etc.)

24. European Energy Exchange AG – EEX
EEX traded volumes (85,7 TWh in 2005 – 17%)
2003
2002
2001
2000

25. Mercardo de Electricidad - OMEL
OMEL characteristics
Intraday Market
January 1998
Spot Market
January 1998
Futures Market
? End of 2003 ?
Ownership structure
15,73%
Others
4,00%
Santander Central Hispano Investment
5,00%
Ibercaja
Analistas Financieros Internacionales
BBVA
Abengoa
5,71%
Asociación Española de la Industria Eléctrica
Gas Natural SDG
Endesa
Iberdrola
Hidroeléctrica del Cantábrico
Unión Eléctrica Fenosa
6,00%
Banco Santander Central Hispano
10,00%
BNP Paribas, sucursal en España
FC&M, Sociedad Rectora del Mercado de Futuros y Opciones sobre Cítricos
OMEL
Number of registered participants
Spot Market 127
„obligatory pool“

26. Mercardo de Electricidad - OMEL
OMEL traded volumes

27. Austrian Energy Exchange – EXAA
EXAA characteristics
Spot Market
March 2002 (hours)
February 2003 (blocks)
Spread Market
October 2003
Ownership structure
2003
Company
Share in %
Number of registered participants
Spot Market 33

28. Austrian Energy Exchange – EXAA
EXAA traded volumes
2003
2002

29. Austrian Energy Exchange – EXAA

30. Polish Power Exchange – Gielda Energii SA
GE characteristics
Gielda Energii
The Day Ahead Market
4 July 2000
Electricity Delivery Futures Market
23 May 2001 (2006 stopped)
2003
Ownership structure
Green Electricity Market
4 July 2001
Number of registered participants
Spot Market 27

31. Polish Power Exchange – Gielda Energii SA
GE traded volumes
2001
2002

32. French Power Exchange – Powernext SA
Powernext characteristics
Number of registered participants
Spot Market 51
Powernext
Day Ahead Market
November 2001
2003
Ownership structure
HGRT
Réseau de Transport d'Electricité – RTE (51%)
ELIA (24,5%),
TENNET (24,5%)

33. French Power Exchange – Powernext
Powernext traded volumes

34. NETA – New Electricity Trading Arrangements
Introduced in England and Wales in 2001, designed to provide greater competition (replacement of obligatory UK Pool)
Based on bilateral trading between generators, suppliers, traders and customers
day ahead markets
forwards and futures markets
Balancing Mechanism
Imbalance Settlement process

35. NETA – New Electricity Trading Arrangements
Day ahead markets
UKPX, APX UK
Forwards and futures markets
UKPX, IPE
Balancing Mechanism
ELEXON
Imbalance Settlement Process
NETA
Market players

36. UK Power Exchange UKPX characteristics OM Group UKPX
100%
UKPX
Spot Market
June 2000
Futures Market
March 2001
Nordpool trading system

37. Automated Power Exchange – APX (International)
APX UK characteristics
Spot Market
Energy Contract Volume
Notification Agent (ECVNA)
The Spot Market
comprises continuous trading of contracts for physical electricity via an anonymous trading platform. All trades executed in the Spot Market are automatically notified to the ECVAA and settled electronically among participants.
Third Party ECVNA.
In addition to notifying physical contracts that have been traded on APX UK’s system, APX UK offers a service whereby participants can notify physical contract volumes matched bilaterally.

38. International Petroleum Exchange - IPE
IPE characteristics
International Petroleum Exchange
Gas Oil Futures
Brent Crude Futures
Electricity Futures
March 2001
Gas Futures
January 1997
The IPE is Europe's leading energy futures and options exchange and its contracts are used as global benchmarks for physical pricing. It currently lists contracts for four major energy products.

39. ENMO (UK) ENMO characteristics ENMO On-the-Day Gas Commodity Market
October 1999
The Gas Day Physical Futures Market
July 2001
ENMO
Electricity Spot Market
????
Forward Electricity Market
????
National Grid and Altra Energy Technologies, together with Logica Esis will offer within EnMO also electricity markets on a single screen via the internet or a dedicated line.
Participants will be then able to trade spot or forward in both commodities. The exchange will offer a fully cleared service for all of its products.

40. Romanian Power Market Operator - OPCOM
OPCOM characteristics
C.N. Translectrica, S.A.
transmission system operator
100% state owned company
OPCOM
Spot Market
2002
Number of registered participants 51

41. Czech Power Exchange - OTE
OTE characteristics
Ministry of Industry and Trade
100%
Number of registered participants 26
OTE
Spot Market
January 2002
Balancing Market
January 2004
Intraday Market
January 2004
OTE’s electronic trading system was created by Logica/Soluziona and is based on OMEL system

42. Czech Power Exchange - OTE
Bilateral
Contracts
Registration
Daily Market
Bids/Offers
Registration
Daily
Physical
Trading
Invoicing
A.S.
Settlement
Daily
Spot Market
Settlement
Deviation
valuation
Deviation
settlement
16:00
12:00
19:30
11:00
19:30
D-2
D-1 D
D+1
D+2
End of
Month + 4

43. Czech Power Exchange - OTE
OTE daily traded volumes and prices in 2004/5

44. Summary – trading systems
Nord Pool based trading system
Siemens based
trading system
LPX
UKPX
Gielda Energie
Nord Pool
Power Next
EXAA
OMEL based trading system
GME
OMEL
APX
OTE
APX UK

45. Future of power market Predominance of bilateral contracts
Development of spot and financial markets – risk management
Develompment of OTC clearing services
Vision of unified homogenous internal power market in Europe - ???
Market splitting - tool of congestion management UK
Scandinavian market
Dutch market
German market
CE market