Q&A: EEX
GI: Market coupling is taking shape in fostering the co-ordinated integration of the European power markets. What has been your role in this and what can we expect next? H-BM: Our joint venture EPEX Spot operates the German, Austrian, French and Swiss Spot Markets for power. Therefore, EPEX Spot is involved in various market coupling projects such as the Nordic volume coupling (EMCC; European Market Coupling Company GmbH), launched in November 2009, and the Central West European price coupling (CWE) which was launched recently. From our perspective market coupling is a good step towards market integration but does not yet lead to a systematic Europe-wide harmonisation of prices. With the launch of the new European Electricity Index – ELIX – we have boldly taken the next step towards this harmonisation. On a daily basis, ELIX demonstrates the ‘missing links’ for further market integration to the broader public and is another reflection of the transparency ethos that EEX pursues.
GI: Trading on the Spot Market for Emission Allowances for the second commitment period was launched in January 2009 and earlier this year EEX executed its first trades for Phase III of the EU ETS. What is your next strategy? H-BM: We have taken several measures to push emissions trading in our marketplace. For example, we extended the exchange trading hours for emission futures and introduced EUA Futures which mature in the third commitment period of the EU ETS. Another important effect which led to more interest to trade in our CO2 market was that our market makers are now quoting with tighter spreads. Additionally, we are now concentrating heavily on winning the post-2012 auction of European emissions allowances. As a regulated market, EEX has already successfully executed auctioning on behalf of the German Federal Environment Ministry [since January 2010]. We have thus gathered significant experience for future auctioning and will, of course, be drawing on this experience as a platform operator beyond 2012. In particular, we see significant benefits for EEX regarding quality and safety requirements to counter fraudulent, abusive or illegal conduct. In the recent past, the ongoing need for careful supervision and regulation of energy markets has been further underlined ... especially in light of the VAT carousels on secondary markets for EUAs or the issue of recycled CERs.
GI: How is the development of your carbon auctioning platform taking shape? H-BM: EEX runs the auctioning for 10% of the emission allowances issued by Germany which is also the largest volume of auctionable shares in Europe within the second phase of EU ETS. The auctions take place on a weekly cycle with the auction process and the
“EEX remains committed to pushing the boundaries for increased competitiveness, ambitious organic growth, and to expand our horizons ...” Dr. Hans-Bernd Menzel
settlement of auctioned-off EUAs proceeding smoothly and securely at all times. On the basis of our secure and established systems
and processes we have gained the confidence of market participants which bodes very well for post- 2012 periods.
GI: How has progress in the development of the natural gas market fared? H-BM: In 2010 we have seen an overall increase in volumes in comparison to 2009 for natural gas. On the Spot Market the gas volume (January to October 2010) amounted to a significant figure of 7.3 TWh compared with 2.1 TWh traded in the same period last year. This increased trading activity was mainly due to the
launch of control energy trading and the introduction of the Within-Day product. The liquidity improvement in the futures market is following the improvement on the spot market, although the rate of growth is lower: gas volumes on the Derivatives Market increased to 27.8 TWh from January to October against 8.8 TWh in the same period in 2009.
GI: EEX is scheduled to introduce a natural gas index in 2011. What benefits will this bring to participants across the energy sector? H-BM: The new gas index will enable participants to replace oil prices and other external indices in gas supply contracts and use the EEX gas price as the reference (instead of, or combining it with, existing references). As a consequence, the EEX-linked index
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