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Global Power Derivatives Newsletter | April 2023 |  |
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| Dear Customers, Partners and Friends,
Welcome to our first Global Power Derivatives newsletter of 2023.
After a turbulent last year, we are delighted to have seen encouraging signs of energy markets stabilising, with trading volumes returning to previously seen levels in Europe, a substantial growth at trading in Japan and increasing volumes in our North American markets.
We believe that these positive developments are also due to our ongoing commitment to provide stable trading and clearing conditions, by acting as a “safe haven”. As an Exchange, we safeguard a robust and transparent price formation process to enable the adequate operation of markets. We believe that building resilient markets requires the collaboration of all market players and we are proud to be building our business in partnership with you – by working together to thrive during the recent challenging environment, where change seems to be constant.
Speaking of changes – we welcome the EU’s endeavours to investigate options to re-design the current electricity market for the benefit of all. While we believe that the existing market design has proven itself in recent turbulent times, we work closely with the relevant authorities and trade bodies to understand the best way to move forward. We believe that some directions, especially with regards to Power Purchase Agreements, could have a positive impact on the future, while others, such as the proposal to create regional virtual trading hubs, might need to be approached with more caution.
2023 started in a calmer manner than last year, and we are proud to have been able to launch some long-awaited services this year, such as Lacima’s margining simulator tool and our new co-location service, which offers a state-of-the-art trading infrastructure for participants.
We can’t wait to tell you about our innovations and future plans in person and we are looking forward to meeting you at our upcoming EEX Group events in Madrid, Japan, Poland, or E-world, one of our industry’s flagship conferences. Let´s discuss how we can continue to build markets together.
Until next time,
Steffen Köhler
COO | EEX
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| | Electricity market reform | |
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The EU Commission recently published a proposal to reform Europe’s electricity market design. While we remain convinced that the current market functioned as intended, and has adequately reflected the emergency, we welcome the strong focus on forward markets, which are absolutely key for Europe’s energy transition.
For these markets, recommendations are focused around three key pillars: Power Purchase Agreements, Contracts for Differences and regional virtual trading hubs.
While PPAs could be an effective tool for long-term hedging, in our view, non-market based instruments, such as ill-fitting CfDs, could hinder market integration of renewables and these could come at the expense of forward market liquidity. We also doubt the added value regional virtual trading hubs and related transmission rights would bring, over trading more liquid physical bidding zones with locational spread products.
We believe that removing structural market interventions, including support schemes for mature technologies, would be a more promising way to go. Contact our policy experts Jan Eustachi or Robert Gersdorf or have a read:
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| | | Power derivatives trading levels show growing confidence | |
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| 2022 was the year of uncertainty. While the conflict in Ukraine is still ongoing and global financial markets are somewhat unsteady, on the derivatives energy markets we have seen encouraging signs of trading volumes returning to earlier levels. At EEX, we have seen significant trading level growth in numerous countries, including Japan, Greece and the Netherlands, just to mention a few.
Our expert power derivatives team regularly publishes monthly updates on the markets we are present.
To view our latest monthly power update – click here
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| | Our latest updates on margining | |
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High collateral requirements and margining have been intensively discussed in recent months, and we feel it is important to support our trading partners to navigate these challenging times. Beside continuous margin improvements or the acceptance of EU Emission Allowances as collateral, we grant a very competitive, market-based and transparent interest on cash collateral.
Please see our current and upcoming interest rates here or contact us if you have any questions.
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| | Meet us at E-world | |
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The annual E-world conference is one of the most important meetings for our industry, providing updates on the latest developments but also facilitating networking within the sector.
This year, once again we are attending the exhibition (meet us in Hall 3 Booth 436) and will also run our regular bespoke event titled “New Energy Systems Forum”.
Here you can listen to our experts discussing what the future electricity market design might look like, and what new products and services are in our pipeline. With sustainability being in the core of everything we do, we will also discuss why hydrogen, GOs and Power Purchase Agreements will be important for a cleaner future.
Join us at the New Energy Systems Forum 10am-1pm, 23 May in Hall 1 or set up a meeting with our team by dropping a line to sales@eex.com.
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FOR ALL VIDEO CONTENT - MAKE SURE TO CHECK OUT EEX TV
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| | New products & services | |
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| We are now offering all EEX participants our extended connectivity framework with co-location services, enabling participants to host in-house trading technology close to the Exchange matching engine. In addition, Enhanced Trading Interface high-frequency sessions are now also available for use within co-location. We have also enhanced bandwidth for existing connections and are launching/have launched our revised pricing framework.
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To help navigate the recent volatile market conditions and to support you at anticipating collateral requirements, together with our partner, Lacima, we recently launched the Lacima Margin Estimator tool. It was designed and developed for market participants to estimate margin requirements for a variety of portfolios and provide greater confidence to hedge positions and to manage liquidity risks.
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Meet us in Q2
EEX Spain Workshop | 11 May, Madrid
PXE reception | 11 May, Warsaw
E-World | 23-25 May, Essen
Japan Power 3rd Anniversary | 7 June, Tokyo
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ETCSEE Energy Trading Central & South Eastern Europe | 14-15 June, Vienna
EEX Leipzig Meeting and FIA Workshop | 21 June, Leipzig
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| | Did you know? | |
Our PPA hedging products are available for up to 6 years ahead in most markets and 10 years ahead in Germany, Spain and Italy.
For more info on PPA Hedging, please contact Viviana Ciancibello.
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| If you wish for your e-mail to be removed from EEX’s Newsletter mailing list, please send your request via e-mail to: unsubscribe@eex.com. If you wish to add recipients from your organization to EEX’s Newsletter mailing list, please forward this e-mail to the respective person(s) asking them to send a corresponding request via e-mail to: eex-group-news@eex.com. Recipients of EEX’s Newsletters may object to such usage of their e-mail and request the removal from EEX’s Newsletters mailing list via e-mail to: unsubscribe@eex.com at any time and free of charge.
© 2023 European Energy Exchange AG http://www.eex-group.com
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