Electricity trading in emerging markets Vienna Economic Forum Tirana, Albania 8-9 June 08 1 EXAA 2008

GENERAL INFORMATION ABOUT EXAA 2 EXAA 2008  Business Activities:  Spot Market Energy (43 Participants – 11 countries)  Trading volume 2007  2,3 TWh ~ Clearing volume 190 Mio. €  Spot Market CO2 (22 Particpants – 6 countries)  Auctions (Gas, CERs, VERs, green certificates...)  Services: Trainings, Consulting  Unique selling point:  Lowest Fees in Europe  Fully Internet-based trading platform  First Daily Auction amongst EU exchanges –first price signal  Members  small & medium electricity utilities, traders, banks  more & more members from CEE & SEE

EXAA´s role in the energy market  Market Functions: Provision and operation of ­ Trading system ­ Settlement system EXAA is Central Counter Party ­ EXAA guarantees the financial fulfillment of all traded contracts ­ EXAA is responsible for Risk Management EXAA has final responsibility and control  Our role:  Price transparency  Publication of data 3 EXAA 2008 Signal to market !!

4 EXAA 2008 EXAA is Member of CISMOgroup Clearing Integrated Services and Market Operations Group Power and Carbon Exchange Emissions Certificate Registry Power Transport Capacity Management Green Energy Subsidy Management Balancing Management Power Balancing Management Gas

5 EXAA 2008 CEE / SEE

6 EXAA 2008 Exporter / Importer? Importer

7 EXAA 2008 Situation of Energy market in CEE, SEE:  Within the countries, there is already largely barrier-free access to electricity trading, still lack of liquidity:  Small marktes with different models and market mechanisms EU market framework needs to be implemented  So far not many powertrading utilities, some market operators offer trading opportunities +price indications, exchanges are rare.  Grid needs: ◦ Cross Border Congestion management, ◦ Better use of inter-connectors => avoid network security problems ◦ Separate trading of capacity rights and energy increase complexity, expenses and risk => Regional cooperation is the key issue !

8 EXAA 2008 Power market scenarios in Europe:  In Europe there are currently three different models: 1. Exchanges (market operators) do not have direct access to capacities 2. Exchanges (market operators) will receive a proportion of the available capacity for use 3. Exchanges (market operators) can trade freely across borders, because of no congestions, => Close cooperation between national regulators, traders/exchanges and grid operators needed !

9 EXAA 2008 Example: no direct access  All borders to Austria, except to Germany

10 EXAA 2008 Example: partial direct access  Trilateral market coupling in BELPEX project

11 EXAA 2008 Example: full access  Border between Austria and Germany

12 EXAA 2008 What do Exchanges/Traders need  Three factors are essential to ensure that energy exchanges can offer cross-border trading 1. Easy market access in all involved countries 2. Access to transport capacities – implicitly traded with power 3. Minimum Liquidity: „Free tradable electricity volumes“

Why regional cooperation ?  Development & construction of big power plants need much time and a huge amount of investments  Crossborder energy trading leads to: ­ Increased supply of power ­ Regional price adjustments avoid „price-peaks“ in international markets ­ Better liquidity ­ Risk-Optimization => Leads to better security of supply ! 13 EXAA 2008

14 EXAA 2008 Thank you for your attention ! Jürgen Wahl

Relation GDP  phyical flows ? 15 EXAA GDP per capita [t$]phys. flows [TWh]

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