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Flexible markets are key ingredient for efficient energy transition

EPEX SPOT launches negative prices on Swiss Day-Ahead in 2014

Vienna │ Paris, 05/12/2013 – Renewables challenge the power systems across Europe. The Exchange Council of European Power Exchange EPEX SPOT has been following the topic for years and continues to call for market evolutions. Flexible tools for short-term power trading are the key to mastering the energy transition while maintaining security of supply. Past years have shown that liquid continuous Intraday markets are one of the most accurate instruments for the integration of renewables. EPEX SPOT steadily examines how to further improve these markets and to bring trading as close as possible to real time, in order to cope with intermittency. Following the update of this spring’s meeting, the Exchange Council dis-cussed the progress of several enhancements:
•    Today’s 45 minutes gate closure time could be shortened by fine-tuning the Intraday chain. Reducing the nomination lead time of EPEX SPOT’s clearing house European Commodity Clearing (ECC), needed for the nomination of transactions to the transmis-sion system operators (TSOs) to assure the physical delivery of electricity, is one as-pect. Furthermore, enhancements on several TSOs side – to receive more nominations per hour – and at EPEX SPOT, regarding the data transfer, could foster a lead-time re-duction. The members of the Exchange Council showed strong interest in this topic. EPEX SPOT and ECC will closely cooperate on the matter during 2014.
•    The German Intraday market could open earlier than today’s 3 pm, allowing members to balance their positions on both hourly and 15-minute contracts immediately after auction results. This early opening could also be implemented on the other market areas managed by EPEX SPOT, based on the agreement of the concerned TSOs.

EPEX SPOT will also introduce negative prices on the Swiss Day-Ahead auction in February 2014 subject to successful completion of tests and member readiness. For the moment, Swiss Day-Ahead is the only market segment not using this reliable indicator for oversupply and relies on a minimum price of 0.00 €/MWh. Negative prices send a strong signal for flexi-ble production and storage capacities. EPEX SPOT has published a Q&A on its website illus-trating the means and benefits of negative prices.

“Renewables have become a substantial part of the power system. They need to fully enter the free market now in order to contribute to the price signal and security of supply”, says Peter Heydecker, Chairman of the Exchange Council. Jean-François Conil-Lacoste, Chair-man of the Management Board of EPEX SPOT, adds: “Markets must evolve towards flexibil-ity, otherwise intermittent power sources will continue to elude market mechanisms. A striking all-embracing integration of renewables is crucial for a cost-effective energy transition.”

The fourth meeting of the Exchange Council in 2013 was held in Vienna on 4 December 2013 and was chaired by Peter Heydecker, Head of Origination Gas & Power at Vitol.

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The Exchange Council of EPEX SPOT is an official body of the Exchange. 16 members and 7 permanent guests represent adequately the diversity of economic and corporate profiles that exists among the Exchange Members from various sectors: power trading companies, transmission system operators, regional suppliers and financial service providers, as well as commercial consumers and academics. Its missions include in particular the adoption of the Exchange Rules and the Code of Conduct of EPEX SPOT and their amendments. The Ex-change Council approves new trading systems as well as new Contracts or Market Areas and approves the appointment of the Head of the Market Surveillance Office. It meets up quarterly.

EPEX SPOT SE operates the power spot markets for France, Germany, Austria and Switzerland (Day-Ahead and Intraday). Together these countries account for more than one third of the European electricity consumption. EPEX SPOT SE is a European company (Societas Europaea) based in Paris with a branch in Leipzig. This year, 314 TWh were traded on EPEX SPOT’s power markets until 30 November 2013.