European Energy Exchange

EEX
European Energy Exchange AG
Type Physical commodity and derivates exchange (energy)
Location Leipzig, Germany
Founded 2002
Key people Peter Reitz (CEO)
Steffen Köhler (COO)
Dr. Dr. Tobias Paulun (CSO)
Dr. Thomas Siegl (CRO)
Iris Weidinger (CFO)
Jean-François Conil-Lacoste (EO Power Spot Markets)
Dr. Egbert Laege (EO Gas Markets)
Currency EUR
Commodities Electric power, Natural gas, CO2 Emission Allowances, Coal, Guarantees of Origin
Website www.eex.com

European Energy Exchange AG, Germany's energy exchange, is the leading energy exchange in Central Europe. It develops, operates and connects secure, liquid and transparent markets for energy and related products. On the EEX spot and derivatives markets, power, natural gas, CO2 emission allowances, coal and guarantees of origin are traded.[1]

Overview

The European Energy Exchange is located in Leipzig. The current EEX emerged as a result of a merger between LPX Leipzig Power Exchange and the Frankfurt-based EEX in 2002. Deutsche Börse Group’s derivatives business unit Eurex acquired the majority share in the EEX in March 2011.[2] Eurex Zürich AG controls 62.91% voting share and 75.05% stock share.[3]

EEX operates market platforms for trading in electric energy, natural gas, CO2 emission allowances and coal. EEX holds 50% of the European Power Exchange EPEX SPOT located in Paris which operates short-term trading in power for Germany, Austria, France and Switzerland. EEX's subsidiary EEX Power Derivatives GmbH offers a platform for German and French power derivatives trading.

EEX currently holds shares in the following companies:[4]

  • Cleartrade Exchange Pte Ltd. (100%)
  • EEX Link GmbH (100%)
  • enemarket GmbH (40%)
  • EPEX SPOT SE (51%)
  • European Commodity Clearing AG (100%)
  • Nodal Exchange Holdings, LLC (100%)
  • Power Exchange Central Europe a.s. (66,67%)
  • Powernext SAS (100%)
  • Gaspoint Nordic A/S (100%)

EEX announced that it reached agreement to acquire US-based Nodal Exchange.[5]

Trading volume

In 2013, the trading of electricity on the EEX Power Derivatives Market amounted to 1,263.9 TWh (terawatt hours) compared with 931.4 TWh in 2012. In the year 2013, a total of 346 TWh was traded on the Power Spot Markets of EPEX SPOT (2012: 339 TWh). In the field of natural gas the volume traded on the EEX amounted to 110 TWh, an increase of 46 percent compared with the previous year (2012: 75.5 TWh). The volume in trading in emission allowances amounted to 850.3 million tonnes in 2013 in total (previous year: 254.6 million tonnes.[6]

Spot market

The spot market for electricity is operated by EPEX SPOT, a joint venture owned by German EEX AG and the French Powernext SAS (its 100% daughter). On each day of the year, EPEX SPOT operates day-ahead auctions for three market areas: Germany/Austria, France and Switzerland. The physical delivery of power takes place on the next day. EPEX SPOT provides also an intraday market for Germany and France. This market can be used to satisfy short-term needs of electricity or to sell short-term over capacities. Participants in the market can buy up to 45 minutes before every hour electricity for the specific hour. This market operates 24/7 without exceptions. The electricity for the next day can be traded from 15:00 onwards.

In 2011, EEX introduced 24/7 trading on the Natural Gas Spot Market. On the Spot Market, companies can trade natural gas on a continuous basis for the current day (within day), one day and two days in advance as well as for the following weekend. Since the launch of 24/7 trading EEX has also offered continuous trading with a minimum lot size of 1 MW (in addition to the 10 MW contracts). Short term gas quantities can be traded on the exchange for delivery in the market areas GASPOOL, NetConnect Germany (NCG) and the Dutch Title Transfer Facility (TTF) area.

EEX offers also a spot market for EU allowances. Since 2005, EEX operates both spot and derivatives markets in emission allowances.[7] EEX has offered trading of emission allowances on the basis of the EU Emissions Trading Scheme (EU ETS) since 2005. EEX currently runs a secondary market for continuous trading on a Spot and Derivatives basis for EU ETS allowances (EUA, EUAA) and Kyoto credits (CER, ERU).[8] As of March 26, 2008, it is possible to trade CER Futures on the EEX (Certified Emission Reductions), global emission credits in accordance with the Kyoto Protocol. On 14 April 2008 EEX and Eurex launched trading of options on EUA Futures. Since January 2010 EEX AG runs the auctioning of the Emission Allowances issued by the Federal Ministry of the Environment. All trading participants admitted to trading in emission allowances on EEX are able to take part in the auction without any further preconditions regarding licensing. From the very beginning, this also included all trading participants taking part in the existing Eurex cooperation on the Derivatives Market. In addition, EEX also carries out the EUA auctions for further countries (Poland, Hungary). The European Energy Exchange (EEX) has won the tendering procedure for the transitory auctioning platform for the EUA auctioned off by Germany for the third emissions trading period in February 2012 and it was chosen as cooperation exchange for the NER30 program of the European Investment Bank (EIB). As of 30 April 2012, emission allowances for the aviation industry (EU Aviation Allowances – EUAA) will also be offered for trading. Furthermore, Futures on Emission Reduction Units (ERU) will be launched at the end of April. In March, EEX extended the futures on Certified Emission Reductions (CER) for all maturities of the third trading period.

Derivatives market

Participants on the EEX can trade power contracts (weeks, months, quarters, years) up to 6 years in the future. The Power Futures are financially settled contracts, but they can be physically delivered in Germany, France, Austria, Belgium, the Netherlands and Italy (Coming). Besides electricity also natural gas futures (market areas GASPOOL and NCG), financial coal futures and a broad range of CO2 derivatives (Futures on EUA, CER, EUAA and ERU) can be traded at the EEX-Derivatives market.

Furthermore, Guarantees of Origin (GoOs) are tradable on the EEX derivatives market. GoOs are certificates which confirm that a given Megawatt Hour of power has been generated from renewable resources. These are exclusively issued for disclosure and transparency purposes and they are cancelled upon use. Trading in Guarantees of Origin on EEX is not connected with the delivery of power. Guarantees of Origin can be traded up to three years into the future. There are two maturities per year. EEX offers three products on the Derivatives Market:

  • Nordic Hydro - Guarantees of Origin for Hydropower from Scandinavia (Denmark, Finland, Norway and Sweden)
  • Alpine Hydro - Guarantees of Origin for Hydropower from the Alpine region (Germany, Austria and Switzerland)
  • Central Northern European Wind - Guarantees of Origin for Wind Power from north-western Europe (Belgium, Denmark, Germany and the Netherlands)

Clearing and settlement

Clearing and settlement of all exchange transactions is done by the European Commodity Clearing AG (ECC). ECC was founded in 2006 with the transfer of the EEX clearing activities to this subsidiary.[9] Specialised on the physical delivery of energy products, ECC is dedicated clearing provider for six exchanges: European Energy Exchange (EEX), Central European Gas Hub AG (CEGH), EPEX SPOT, Hungarian Power Exchange (HUPX), POWER EXCHANGE CENTRAL EUROPE, and Powernext. Furthermore, EEX and ECC provide the service of Trade Registration. This service enables the trading participants and the trade registration participants to conclude transactions through registration by mutual agreement or to have over-the-counter transactions registered.

Transparency

EEX operates "Transparency in Energy Markets”, the neutral platform for energy market data which fulfils the statutory publication requirements and implements the market participants’ voluntary commitments. The platform was established by EEX and the four German transmission system operators and launched in October 2009. In 2011, the Austrian transmission system operator Austrian Power Grid AG joined the cooperation. EEX is in charge of the operation of the platform, which comprises plausibility checking, anonymisation, aggregation and publication of the data reported.

On 2 September 2014, the European Energy Exchange (EEX) launched its new transparency site. At www.eex-transparency.com, visitors can gain access to comprehensive fundamental data and relevant information for wholesale energy trading. The website is a further development of the existing platform “Transparency in Energy Market” and contains information about capacity, utilization and availability of facilities for the production of electricity as well as new information on the storage of electricity and natural gas consumption.

References

  1. ↑ EEX Product Brochure 2014 Archived 9 March 2014 at the Wayback Machine.
  2. ↑ "Deutsche Boerse unit buys majority in EEX". Reuters. 2017-02-23. Retrieved 2017-03-04.
  3. ↑ "Shareholders". www.eex.com. Retrieved 2017-03-04.
  4. ↑ Shares held by EEX as of 2018-09-20
  5. ↑ "Deutsche Boerse's EEX acquires US based Nodal Exchange | Financial Industry & Algorithmic Trading News | Automated Trader". www.automatedtrader.net. Retrieved 2017-03-04.
  6. ↑ EEX end-of-year-review 2013, Date: 01/14/2014
  7. ↑ Emission Allowances Overview Archived 4 March 2014 at the Wayback Machine.
  8. ↑ Emission Allowances Secondary Market Archived 4 March 2014 at the Wayback Machine.
  9. ↑ Press Release, 07/05/2006 Archived 16 April 2014 at the Wayback Machine.
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