Power Derivatives Newsletter | April 2019
EEX Group - #1 in power trading world-wide
In 2018, EEX Group has strengthened its position as the number one market place for power trading world-wide. This includes the European power spot markets of EPEX SPOT as well as the power derivatives markets operated by EEX in Europe and by Nodal Exchange in the US. Altogether, in 2018, the exchanges have surpassed trading volumes of the previous year by more than 30%. The global power offering of EEX is an important pillar of the Group’s ambition to be the preferred Global Commodity Exchange Group.
A powerful start to 2019
EEX has seen a strong start into 2019 with trading volumes increasing significantly in core European market areas. Overall, trading volumes in the European markets increased by 40% between January and March. In particular, strong growth in the markets for Germany (Phelix-DE), Spain as well as the Central and South-Eastern (CSEE) power markets contributed to the positive development.
Throughout the whole quarter, trading activity continued to shift from the OTC-bilateral market to EEX-cleared in major European market areas. In the most liquid European power product Phelix-DE, EEX achieved a market share of 43% in the first quarter of the year whereas the average market share of the year 2018 accounted for 31%. This underlines the increasing importance of exchange-based trading with subsequent clearing which ensures fair and transparent pricing and eliminates counterparty risk.
> see more details in the EEX Group Quarterly Report
Nodal increases position in US power market
Nodal Exchange increased its position to become a significant part of the North American power market, achieving a record 32.9% market share of traded volume in Q1 2019 and a record 35.2% market share of open interest as of March 31, 2019 (642 million MWh). Nodal Exchange achieved a new quarterly trading record in power futures with a total volume of 405 million MWh in Q1 2019 (notional value of $13 billion per side). This resulted in a 64% growth rate in Q1 2019 over Q1 2018 while the total industry market grew by just 3%.
Nodal Exchange is a leader in innovation, having introduced the world’s largest set of electric power locational (nodal) futures contracts as well as being the pioneer in portfolio margining using expected shortfall for initial margin. Nodal Exchange’s success is due to these and other innovations, and, in particular, to its granular contract offering, which allows participants to create more effective hedges. PJM zonal locations traded volume for the industry grew 21% year on year in Q1 2019 as traders seek more granular hedges. Nodal Exchange has the majority market share in this important and growing sector.
Last month, we had the pleasure of hosting our first EEX Group Japanese Power Workshop in Tokyo to discuss a potential offering for power derivatives with the local regulators and potential clients. We were completely overwhelmed by the level of participation with over 100 participants attending – not only from Japan, but also from our existing customer base in Europe and the US as well as other interested parties based in Singapore and Australia which shows the huge interest in this market.
The whole team has been excited at the level of support and feedback from the market which in turn will help us build and refine our proposition. We’re just at the beginning of a journey which we will make hand in hand with the industry but we are very much looking forward to working with all stakeholders in the coming months to ensure that we launch the best possible product for the Japanese power market.
Power Spotlight - The PiE interview: EEX targets long-term PPA price risk
In her latest interview with S&P Global Platts’ Henry Edwardes-Evans, our #eexpert Viviana Ciancibello outlines the trends in the PPA market and explains how EEX enables PPA hedging via its power futures portfolio.
> To read the full interview, click here
Original interview printed in Power In Europe published by S&P Global Platts
European Power Derivatives reach new milestone!
On 3 June, EEX will expand its product range on the derivatives market with new power futures for Slovenia, Serbia and Bulgaria, thereby extending its range to 20 market areas throughout Europe. The listing of the new power futures extends the pan-European offering of EEX to the emerging power markets in Central and South Eastern Europe. The product offering will include cash-settled power futures for Slovenia covering base and peak load products with weekly, monthly, quarterly and yearly expiries. Additionally, cash-settled Bulgarian and Serbian base load products with the same expiries will also be launched.
> Click here to read the full press release.
Get more information on our Power Derivatives portfolio
Learn more about EEX’s power derivatives portfolio as well as major trends in the power market in our latest video with #eexpert Steffen Riediger.
> watch our video on Power Derivatives
> download the latest flyer