Nasdaq eyes European players for new UK power market

LONDON, Sept 24 (Reuters) - Next month's launch of the N2EX exchange and clearing facility will encourage European physical power traders and financial institutions to enter the British wholesale power market, the head of Nasdaq OMX Commodities said.

Nasdaq OMX Commodities and Nord Pool were chosen by Britain's Future and Options Association (FOA) to create the new power exchange and clearing service to revitalise the British wholesale power market. [ID:nLF179593] [ID:nLP350972]

"One of the advantages is we already have a lot financial players and physical traders from other countries on our portfolio in the Nordic area," Geir Reigstad told Reuters on the sidelines of the Energy Markets and Derivatives 2009 conference in London on Thursday.

Nasdaq OMX Commodities, part of U.S. based Nasdaq (NDAQ.O), operates energy related derivatives products in the Nordic region, including Finland, Sweden, Denmark, and Norway. The British power market lacks a single consistent reference price, which has put off European traders and financial players, but the N2EX's day-ahead auction hopes to provide a benchmark.

Reigstad warned the new power exchange, set to start a market trial on Oct. 16, could fail to build liquidity if it was not supported by the big six British power generators.

"The biggest risk to the N2EX is if the main players don't support the market as promised," Reigstad said.

He added that no commitment had been made by power generators, but the big six were all part of the process of developing the new market.

FOA members include all of the big six vertically integrated utilities in the British market: Scottish and Southern Energy (SSE.L), Centrica (CNA.L), RWE npower (RWEG.DE), EDF Energy (EDF.PA), E.ON UK (EONGn.DE) and Iberdrola's (IBE.MC) Scottish Power. (Reporting by Kwok W. Wan, editing by Anthony Barker)