What is a power market?Electricity is an essential good in our society. Not only it supports us with light and warmth; it also is the basic element of our industrial value chain. Since more than one decade, a political change of mind has led to the liberalization of the power markets. Its goal: the creation of an internal European market which achieves security of supply and competitive prices and services for the customers. In this market, a growing variety of enterprises organizes the production, the trading, the marketing, the transmission and the supply of electricity, respecting appropriate regulation. Producers compete to sell energy at the best possible price. The suppliers which deliver electricity to the final consumers buy the energy on the wholesale market from the producers or the trading companies.
What is a power exchange?Power exchanges offer a trading platform to exchange members submitting bids for buying and selling power. They organize markets that are optional and anonymous and accessible to all participants satisfying admission requirements. The main objective of power exchanges is to ensure a transparent and reliable wholesale price formation mechanism on the power market by matching supply and demand at a fair price and insure that the trades done at the exchange are finally delivered and paid.
Why do we need liquid wholesale markets in Europe?
Efficient and liquid wholesale markets are a prerequisite for competitive retail markets and hence an advantage for the final consumer. The larger the supply and demand, the more relevant and competitive the prices; therefore increasing the liquidity of the European market place is a means to maximize social welfare. In order to render the European power market more liquid and competitive, exchanges need valuable cross-border power trading instruments. EPEX SPOT provides such instruments for efficient, transparent and secure transactions in standardized products.
Learn more about the role of EPEX SPOT in the wholesale market on the following page