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Flexibilization is a central element of the further enhancement of power markets

Energy policy workshop of EPEX SPOT in Berlin

Flexibilization is a central element of the further enhancement of power markets

Berlin / Paris, 29 September 2014 – The further flexibilization of legal, technical and economical aspects of the European power market is a central factor of their successful enhancement. This would be the only way to cope with the challenges emerging through the energy transition in Europe and the rapid growth of renewable energy sources (RES).

This was the key message of the speakers during the energy policy workshop organized by the European Power Exchange EPEX SPOT at the beginning of September in Berlin. The workshop’s title, “After the EEG reform: capacity markets, energy transition and the future role of European Power Exchanges”, led to a vivid discussion between Patrick Graichen, Ph.D. (director of German think-tank Agora Energiewende), professor Jan Horst Keppler (Scientific Director of the Chair on European Electricity Markets at Université Paris-Dauphine), Jean-François Conil-Lacoste (Chairman of the Management Board of EPEX SPOT) and the media.

In his speech, Patrick Graichen called for a reduction of barriers that, in his opinion, hindered flexibilization. Minimum load for fossil-fuelled power plants should be reduced, launch times should be raised and ramps should be accelerated. He also expressed his support for the temporary interruption of wind and solar generation, so that they would contribute to the functioning of the entire market. In view of the further development of the EEG law – the German law on the support of RES – scheduled for 2016, Graichen pointed out some open issues. The European regulation on state aid would necessitate a switch to tenders from 2017 on. Furthermore, distortions, such as through own power consumption, have not been eliminated in the latest amendment.

Jan Horst Keppler, in his contribution, underlined that capacity mechanisms in European countries heavily differ due to the fact that the challenges were different in each country. In France for example, heavy peak load needs to be covered, whereas in the UK, base load capacities are missing. In Germany it is all about balancing the volatility of wind and solar generation by using gas-fuelled power plants. It could be an option to pay for the standby of these plants in order to assure their cost-effectiveness. Keppler stressed that capacity markets are an intermediate solution that in the best case make themselves dispensable.

Jean-François Conil-Lacoste emphasized that especially power spot Exchanges have contributed to flexibilization through their products. EPEX SPOT has launched 15-minute contracts on the continuous German Intraday market already back in 2011. These contracts are ideal to cover the increasing variations in RES generation. End of 2014, EPEX SPOT will also launch a daily auction on the German market at 3 pm in order to use the high liquidity at this moment of the day for a clear price signal on 15-minute basis. Conil-Lacoste invited market participants explicitly to address further suggestions to Power Exchanges.

The European Power Exchange EPEX SPOT SE operates the power spot markets for Germany, France, Austria and Switzerland (Day-Ahead and Intraday). Together these countries account for more than one third of the European power consumption. EPEX SPOT also acts as market operating service provider for the Hungarian Power Exchange HUPX and operates the coupling between the Czech, the Slovak, the Hungarian and soon the Romanian markets on behalf of the local Exchanges. It is a European company (Societas Europaea) based in Paris with branches in Leipzig, Bern and Vienna. Over 220 companies from Europe are active on EPEX SPOT. 249 TWh were traded on EPEX SPOT’s power markets in the first eight months of 2014.