Utility Week

UTILITY Week 21st March 2014

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28 | 21st - 27th March 2014 | UtILItY WEEK Markets & Trading This week Nord Pool Spot set to revamp N2EX market NPs to develop intraday platform 'harmonised with European cross-border intraday developments' Short-term power trading in the largest volume UK power market N2EX is set to be aligned with European intraday cross-border trading in a move that will fur- ther integrate power trading in the European Union. The partners in N2EX have divided ownership of its physical and financial parts to give Nord Pool Spot (NPS) sole ownership of the N2EX short-term trading operation while Nasdaq OMX takes the derivatives trading business. NPS said its full acquisition of N2EX is part of its ambi- tion "to provide consolidated intraday and day-ahead trading opportunities across multiple markets". It said it will develop a new intraday platform, "harmonised with European cross-border intraday developments". NPS was involved in the recent coupling of markets in northwest Europe and the establishment of a "virtual hub" for trading in the UK, enabling more than one exchange to pool liquidity and operate from a common reference price. NPS chief executive Mikael Lundin said: "By taking over N2EX clearing services, we will be able to broaden our service offering to the UK… while continuing to develop a market with greater depth." He said gains from the move would include "economies of scale" and continue to "lower barriers to entry". NPS said the transfer, which it expects to complete by 1 October 2014, will "effectively replicate in the UK the successful Nordic wholesale power market model". It will suspend trading on the current N2EX prompt and intraday markets from 1 April, pending the launch of a new intraday market. TL rENEWabLEs 2020 target 'needs UK-Irish deal soon' Irish wind imports to Britain will not help towards the UK's 2020 renewables target without an urgent intergovernmental agree- ment, a major developer warned last week. Element Power welcomed supportive words from UK prime minister David Cameron and taoiseach Enda Kenny, who dis- cussed the matter last Tuesday. The two leaders agreed "it was very important to continue to work closely together on this key issue", according to a statement from Number 10. However, the previous week Irish energy minister Pat Rab- bitte said a deal was unlikely to be struck in time for the wind turbines to start generating by 2020. And Element said it needed more detail on the support avail- able to keep investors interested. Element's £6.5 billion Green- wire proposal would involve building up to 3GW of onshore wind power capacity in the Irish midlands. Another developer, Mainstream, is aiming to build 5GW to start exporting in 2018. While the two countries signed a memorandum of under- standing in January 2013 to pur- sue these options, there are vari- ous legal and regulatory issues to be thrashed out. Critically, both projects depend on access to UK subsidies and are pitching for support under the contracts for difference regime. Wind power generated in Ireland will require a higher "strike price" than that generated in the UK, to factor in the cost of building an undersea cable, but it promises "sig- nificant cost savings" compared with offshore wind. ELEctrIcItY Commission fines three platforms €7m The European Commission has slapped fines totalling €7 million (£5.8 million) on three electricity trading platforms, for anti- competitive behaviour. The France-based Epex Spot was fined €3.7 million and Nor- way's Nord Pool Spot €2.3 million for agreeing not to compete with each other on spot electricity trading services. That agreement, lasting at least seven months in 2011/12, breached rules on cartels. Meanwhile, Romanian power exchange Opcom was found to have discriminated against EU- based traders outside Romania for more than five years. It received a fine of €1.0 million. Joaquin Almunia, Commis- sion vice president in charge of competition policy, said: "In times when most European consumers are concerned by their rising electricity bills, I am particularly satisfied that we have brought to an end the mar- ket sharing agreement between Epex and Nord Pool Spot." Displaying ambition: NPS broadening UK service Market watch 61 59 57 55 53 51 49 47 Forward power prices Jul 12 Jan 13 2014 £/MWh 2015 2016 Source: Bloomberg Jan 14 Jul 13 Forward power prices fell by 3 to 5 per cent over the past few months on carbon floor price freeze speculation, combined with weak gas prices. the market was pre-empting an announcement expected in Wednesday's Budget, after Utility Week went to press (see utilityweek.co.uk for the latest). the chancellor was widely tipped to fix the carbon tax at its 2015/16 level of £18/ tCO2e to the end of the decade, instead of escalating it as previously assumed. analysts at Liberum capital forecast the expected freeze would suppress wholesale prices by £2 to £6/MWh from 2016 to 2020. Jan 12

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