August 22, 2019 / 2:26 PM / a month ago

Nasdaq plans day-ahead power market launch in Germany, France, Nordics

OSLO (Reuters) - Nasdaq’s commodities exchange plans to launch its day-ahead auction market for electricity in Germany, France and the Nordics around April 2020, its head of European Commodities told Reuters on Thursday.

Currently Nord Pool is alone in the Nordics in offering day-ahead electricity trading, but will be joined by EPEX SPOT at the end of the year.

“We look to launch the day-ahead market in the first half of 2020. We see when we end up, but around April is our target... We aim to launch for all the Nordic countries and Germany and France at the same time,” Georg Aasen said on the sidelines of a conference in Oslo.

Aasen said a new European Union regulation, called Capacity Allocation and Congestion Management (CACM), which calculates how much space can be used on cross-border power lines and allows more competition, facilitated Nasdaq’s decision.

The licences needed are in place for most of the countries that Nasdaq targets in its day-ahead market launch, he added.

“We have the formalities in place to launch in most countries and we are working on the technical system,” he said.

Similarly to the derivatives power market where Nasdaq is already active in the Nordics, the short-term electricity market in the region has also long suffered from falling liquidity.

The Nasdaq Commodities exchange was hit by a multimillion-euro default in 2018 and traders have warned liquidity could fall further as a result of that, and due to pricier collateral requirements that Nasdaq imposed as a response.

Nasdaq, like EPEX SPOT, sees a good business case in entering the short-term electricity market, targeting economies of scale in fees, as members can trade both short-term power and derivatives through the same platform and membership.

“The rationale for that is that it is where we also have derivatives and our ambition is to allow our members to trade both the derivatives and the financials within the same platform, same membership, using the same collateral requirements,” Aasen said.

EPEX SPOT, a unit of EEX, which is Deutsche Boerse’s flagship power derivatives market, plans to launch its within-day and day-ahead markets in the Nordics between November and January, it told Reuters on Wednesday.

Nasdaq does not for the moment plan to also offer intra-day trading, Aasen said.

“Intra-day we are not looking at it for now. We will see, you never know in the future,” he said.

Reporting by Lefteris Karagiannopoulos, editing by Gwladys Fouche, Alexandra Hudson and David Evans

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