Connecting European Energy Markets. Warsaw Power Ring, 5th December 2007 Maik Neubauer, COO - European Energy Exchange

Transcription

1 Connecting European Energy Markets Warsaw Power Ring, 5th December 2007 Maik Neubauer, COO - European Energy Exchange 1

2 Agenda 1 Introduction to EEX 2 The European Energy Market 3 Market coupling in practice 4 Energy Exchanges in Europe 2

3 Agenda 1 Introduction to EEX 2 The European Energy Market 3 Market coupling in practice 4 Energy Exchanges in Europe 3

4 EEX: A story of the European Liberalization of the Energy Markets 1998 Liberalization of the European Energy Markets in Merger of the former Leipzig Power Exchange LPX and the EEX, Frankfurt, to the European Energy Exchange AG 2005 Start of Trading of Emission Allowances within the European Emission Trading System (EU ETS) 2006 Spin-off of the EEX Clearing business into the subsidiary European Commodity Clearing AG 2007 Launch of the German Gas Exchange at EEX Further Spin-offs within the European Growth Strategy of EEX Spotmarket : EEX Power Spot GmbH Futuresmarket : EEX Derivatives Markets GmbH 4

5 Stakeholders of EEX participants from 19 countries Spot market participants 97 Derivatives market participants 186 OTC clearing participants 15 General clearing members 7 Brokers 4 Market makers 7 Transmission system operators as of 23 November

6 EEX: market integration Spot market Trading Straightthrough processing Clearing and settlement Derivatives market OTC market Power Day ahead/ intraday Continuous trading Auction Power Financial futures Physical futures Options Power Corresponding products NL, B Natural gas 2 days ahead Natural gas Physical futures Natural gas D, NL, B CO2 Spot trading CO2 Physical futures CO2 Corresponding products Coal Financial futures Coal Corresponding products Fully integrated clearing with cross-margining through ECC 6

7 Power trading volumes are increasing steadily Spot Derivatives (Estimated) TWh

8 Sep 07 Jul 07 TWh/month Mai 07 Jan 07 Mrz 07 Nov 06 Jul 06 Sep 06 Mai 06 Mrz 06 Jan 06 Sep 05 Nov 05 Jul 05 Mai 05 Jan 05 Mrz 05 Nov 04 Sep 04 Jul 04 Mai 04 Mrz 04 Jan 04 Nov 03 Sep 03 Jul 03 Mai Jan 03 Mrz Nov 02 Sep 02 Jul 02 Open interest is rising open interest in TWh monthly trade volume TWh 350 average open interest (prev. day) TWh

9 Agenda 1 Introduction to EEX 2 The European Energy Market 3 Market coupling in practice 4 Energy Exchanges in Europe 9

10 0 Jan 01 Mrz 01 Mai 01 Jul 01 Sep 01 Nov 01 Jan 02 Mrz 02 Mai 02 Jul 02 Sep 02 Nov 02 Jan 03 Mrz 03 Mai 03 Jul 03 Sep 03 Nov 03 Jan 04 Mrz 04 Mai 04 Jul 04 Sep 04 Nov 04 Jan 05 Mrz 05 Mai 05 Jul 05 Sep 05 Nov 05 Jan 06 Mrz 06 Mai 06 Jul 06 Sep 06 Nov 06 Jan 07 Mrz 07 Mai 07 Jul 07 Sep EEX APX EEX EXAA Powernext NordPool Powernext ENDEX Jul 2007 Mai 2007 Mrz 2007 Jan 2007 Nov 2006 Sep Jul Mai 2006 /MWh Mrz 2006 Jan 2006 EEX prices are representative for European power markets Monthly average price for day-ahead Baseload Europäische Preise Baseload Cal08 ( /MWh) ICE West DK OMEL as of 30 September

11 Price Correlations in Europe are high European Price Development - Baseload Cal08 ( /MWh) EEX Powernext NordPool ENDEX Jul 2007 Mai 2007 Mrz 2007 Jan 2007 Nov 2006 Sep 2006 Jul 2006 Mai 2006 Mrz 2006 Jan ICE as of 30 September

12 The European Vision One internal market for Energy 12

13 The European Vision One internal market for Energy In order to achieve a single European network from the perspective of the network user, there is a need for appropriate harmonization of market design, especially regarding methods having an effect on cross border trade. Action is needed, wherever current capacity is insufficient, to develop interconnector-capacity as a necessary condition for the development of competition and the integration of markets. These aims can only be achieved through increased cooperation between national regulators inducing increased cooperation among TSOs across national borders within a well-defined procedural framework. Excerpt from EU Sector Inquiry, Summary Page 329, January

14 Study Results on Open Market Coupling Study group Open Market Coupling with the German regulator ( Bundesnetzagentur ) Participation of regulator, 4 German TSOs, EEX, VDN, VDEW, ViK & EFET Focus on comprehensive approach addressing technical, regulatory and economic questions. Support from external legal, technical and economical experts. 3 studies have been conducted: Legal Technical Economical Impacts 14

15 Study Results on Open Market Coupling Economic Results Economical study Scope Criteria for evaluation: welfare Model: France (Powernext), Netherlands (APX) and Germany (EEX) Scenarios: a) explicit auction, b) implicit auctions Impact of intraday market on study results Impact of load flow on study result Additional welfare through market coupling: between 15 and 50 Mio. /year 15

16 Explicit auctions at the German/ Danish-border unused capacity towards country with higher spot price [MW] Market coupling is particularly useful when price differences are rather small source: difference between EEX (Phelix) und Nord Pool (DK West) prices [ /MWh] 16

17 Agenda 1 Introduction to EEX 2 The European Energy Market 3 Market coupling in practice 4 Energy Exchanges in Europe 17

18 Connecting Germany and Denmark In line with EU regulation 1228/2003/EC, the involved parties adopted a Memorandum of Understanding on 27 October 2006 Aim is introduction of implicit auctions for daily crossborder capacity allocation for both interconnectors between Germany and Denmark Co-operation open to other TSOs and power exchanges according to predefined rules Introduction of central auction office for operational tasks 18

19 The first step - Connecting Germany and Denmark emcc will perform volume coupling between Germany and Denmark emcc will be a regular company located in Hamburg emcc s clients will be TSOs and commercial capacity holders who provide their capacities for market coupling purposes emcc will be financed by a cost-based service fee emcc welcomes other capacity holders to use emcc services 19

20 Emcc Market Coupling schedule 12:00 12:15 12:45 Before 14:30 Gate closure time (GCT) Publication of EEX trading results End of objection period Delivery of schedules to TSOs EEX schedule today delay EEX schedule with emcc market coupling 12:00 GCT 12:35 12:30 12:10 emcc calculation Delivery of bidding curves to emcc Publication of EEX trading results Delivery of additional bids by emcc 13:05 Before 14:30 End of objection period Delivery of schedules to TSOs 20

21 Conclusions about Market Coupling 2. Market Coupling will further reduce barriers in cross-border trading 3. In order to ensure compatibility of different market coupling projects, the contribution of all partners is necessary 4. Market Coupling is the efficient handling of congestions, no more and no less 5. but Market Coupling alone does not lead to the integrated European Power Market, it is only a first step towards market optimization 21

22 Agenda 1 Introduction to EEX 2 The European Energy Market 3 Market coupling in practice 4 Energy Exchanges in Europe 22

23 Energy Exchanges in Europe Need for Consolidation? Nord Pool Spot Nord Pool ASA Intercontinental Exchange European Energy Exchange AG Tender for establishing a power exchange in UK Towarowa Gielda Energii SA ENDEX European Energy Derivatives Exchange N.V. Operátor trhu s elektrinou, a.s. APX B.V. Energetická Burza Praha Belpex SA EXAA Abwicklungsstelle für Energieprodukte AG Powernext SA Operatorul Pietei de Energie Electrica OPCOM SA Operador de Mercado Ibérico de Energia (Pólo Português), SA Operador del Mercado Ibérico de Energía Polo Español, S.A. Borzen, organizator trga z elektricno energijo, d.o.o. Gestore del mercato elettrico S.p.a. Borsa italiana TSO-initiative in Hungaria 23

24 Implications for Commodity Exchanges in Europe Consolidation is in front of us Liquid Exchanges should deliver the price signals for the European OTC Markets Coopetition between Exchanges and Brokers Technology will be an important driver of efficient markets Professional Clearing Houses will be necessary for efficient and secure commodity markets Energy Markets will be regulated like the international Financial Markets in the near Future Energy Markets will be driven by Financial Markets Players which will insist on efficient, transparent and regulated Exchanges in Europe There will be room for 3-4 Energy/Commodity Exchanges in Europe to cover the different markets for Oil / Coal / Natural Gas Power / Emissions Clearing & Settlement Services / Cross-Margining & Risk Services 24

25 EEX Open for Partnerships to create a pan-european Energy Exchange European Energy Derivatives Exchange N.V. European Energy Exchange AG >99% 100% 100% Nominal Share European Commodity Clearing AG EEX Power Spot GmbH EEX Derivatives Markets GmbH seit 2006 seit 2007 geplant für 2008 Open for Cooperations 25

26 Cooperation in Emissions Trading Started Today: EEX and Eurex Product Cooperation in International Emissions Trading 26

27 Vision An integrated european Energy Exchange We would appreciate an integrated Exchange for Energy Products in Europe Mr. Wulf Bernotat EEX may be a good model for an integrated Energy Exchange in Europe. I would prefer an Exchange organization with multiple locations throughout Europe to create a pan-european and efficient Energy Market. Mr. Andris Piebalg 27