1. Amsterdam Power eXchange An auctioned electricity market B. Den Ouden CEO, Amsterdam Power Exchange Spotmarket BV

2. Pagina 2 Amsterdam Power eXchange Independent n Shareholder: grid company 100% n Shareholder grid company: Dutch state n Completely independent n Firm trading system n Back-up systems n Always produces a price Dutch state Grid operator TenneT Amsterdam Power eXchange 100%

3. Pagina 3 Amsterdam Power eXchange Daily spot market: 2-sided auction, anonymous bids, batch process P rijs Hoeveelheid Aanbod Vraag marktprijs Verhandeld volume 24x + blocks: Daily program Conditional bids

4. Pagina 4 Amsterdam Power eXchange Full bid curve transparency curves\curves.html Print this page

5. Pagina 5 Amsterdam Power eXchange Price (movements) Av. 2001: 33 €/MWh Av. 2002: 30 €/MWh

6. Pagina 6 Amsterdam Power eXchange Spot volumes as % of national consuption

7. Pagina 7 Amsterdam Power eXchange Market suffers somewhat… n ENRON demise n USA traders have left the stage n Ongoing mergers/consolidations n Market power issues n Skepticism about electricity liberalization

8. Pagina 8 Amsterdam Power eXchange No. of market parties directly active

9. Pagina 9 Amsterdam Power eXchange Acquisitions n First combined exchange in electricity & natural gas n International n Multi-commodity n Multi-commodity n Added value n Brand in Europe APX UK EnMO

10. Pagina 10 Amsterdam Power eXchange Monthly volumes (gas scale 50% reduced) GWh/month Natural gas

11. Pagina 11 Amsterdam Power eXchange Volumes UK gas: EnMO Mln MWh/mnd

12. Pagina 12 Amsterdam Power eXchange Belgium and the Netherlands: physical flows ‘Rare’ 87% 36% 29% 21% 91% 93% 10%

13. Pagina 13 Amsterdam Power eXchange Implicit auctioning: partial in the first step? Belgium-Dutch border: n Yearly auction 325 n Monthly auction 225 n Daily explicit auction ~ 550 MW n Daily implicit auction ~ 550 MW Long term contracts: still physical in this phase

14. Pagina 14 Amsterdam Power eXchange Development into full market coupling Belgium-Dutch border: n Yearly auction 325 n Monthly auction 225 n Daily explicit auction ~ 550 MW n Daily implicit auction ~ 1100 MW Long term contracts: financial

15. Pagina 15 Amsterdam Power eXchange Trading system for implicit auctioning: Exchange price varies with potential im/export Price Volume Price: exports with exports > isolated area > imports with imports >

16. Pagina 16 Amsterdam Power eXchange Implicit auctioning Price Elasticity Curves for each area Area Prices Exports Imports Isolated price X Isolated price Y price of area Y price of area X Elasticity curves Depicting price influence of potential im/exports to/from each individual area 0 © June 2003 Amsterdam Power Exchange Spotmarket BV www.apx.nl

17. Pagina 17 Amsterdam Power eXchange Implicit auctioning: coupling the areas Import in X = export in Y Area Prices Flow X->Y Flow Y-> X Isolated price X Isolated price Y price of area Y price of area X Daily capacity ? To be supplied by TSO’s……… 0 © June 2003 Amsterdam Power Exchange Spotmarket BV www.apx.nl

18. Pagina 18 Amsterdam Power eXchange Implicit auctioning: unconstrained Area Prices Flow X->Y Flow Y-> X price of area Y price of area X Unconstrained case Price for both areas identical: enough capacity to set price at intersection of curves 0 © June 2003 Amsterdam Power Exchange Spotmarket BV www.apx.nl Area price X = Area price Y Available transmission capacity

19. Pagina 19 Amsterdam Power eXchange Implicit auctioning: constrained Area Prices Flow X->Y Flow Y-> X price of area Y price of area X Constrained case Prices for areas differ: set at maximum im/exports 0 © June 2003 Amsterdam Power Exchange Spotmarket BV www.apx.nl Area price X Area price Y Available transmission capacity

20. Pagina 20 Amsterdam Power eXchange Block bids: user-definable multi-hour Suited for thermal generation Supply Blocks example Demand Blocks Example + “price peak shaving”

21. Pagina 21 Amsterdam Power eXchange Some improvements of auction system Old system New system Handling Centrally, internet Local client Preparation bids Only on-line Off-line + on-line Speed Slow to Medium Fast to very Fast Data im/export Typing + “bid generator” Copy&paste: XML, Excel Security settings Limited, central only Many, locally customized AlgorithmLicensed Own development IT maint./operat. Outsourced Partly in-house Back-upCumbersomeAutomated

22. Pagina 22 Amsterdam Power eXchange Bid interface

23. Pagina 23 Amsterdam Power eXchange It’s not only auctions…. n Continuous trading system n Developed for: –Electricity market UK –Other products –Derivatives markets n Possibility to combine with auctions in one system n “One stop shop”

24. Pagina 24 Amsterdam Power eXchange …but auctions are still the best! (At least for our type of market) n Fast and reliable n Easy, user-friendy n Concentrate all the daily liquidity n Integrate hourly trading & block trading n Enable implicit cross-border auctions n Generate one clear index for OTC reference and derivatives  sound basis for financial market