COLOGNE, Germany (Reuters) - Europe’s leading power exchange, the EEX, aims to start trading contracts for hydro-electric, wind and solar power in the first quarter of 2013, its chief executive said on Tuesday, a day after the bourse outlined plans for the products.
The EEX would be the first marketplace for tradeable green power futures in mainland Europe. The new contracts should appeal to investors seeking to diversify away from conventional power such as nuclear, and coal and gas-fired, and into the fast-growing green energy sector.
Renewables already contribute about 25 percent of total German power usage.
“We are still discussing how to bundle liquidity in green power futures and how to distinguish between regions,” said CEO Peter Reitz in an interview with Reuters.
“We assume that we can start trading (green power contracts) in the first quarter of next year.”
According to the plans, the EEX, which offers energy futures out of Leipzig, and its Paris-based partner Epex Spot would offer forward and spot power respectively in the shape of certified guarantees of origin, up to 12 months in advance.
Reitz said the bourse was in talks with national registries of such certificates, in which a fledgling over-the-counter trade has existed for years, to ensure the papers can be tracked and booked along the lines of carbon emission rights.
The bourse would differentiate between Central West Europe (CWE), where it already trades power, gas and CO2, and the Nordic region with its vast hydro and wind resources, he said.
CWE encompasses Germany, France, Belgium, the Netherlands, Switzerland and Austria. The Nordic region encompasses Denmark, Finland, Norway and Sweden.
The EEX, which is majority owned by German-Swiss Eurex (DB1Gn.DE), is targeting more diversification outside its flagship power contracts and more partnerships in Europe.
Reitz said that the EEX, which offers clearing services for energy trades on six bourses via its clearing arm ECC, was likely to announce the results of that search later in 2012.
“I assume that this year we will be able to win more partners for clearing services,” he said. “We are not bound by any geographical direction but eastern Europe is obviously an interesting market area for partnerships.”
Epex Spot provides price coupling services for Czech, Slovakian and Hungarian power exchanges.
Clearing ensures that counterparty risks in commodities trades are reduced.
Reitz also said that gas trading on the EEX was still expanding. Spot gas trade nearly doubled in first-half 2012 over the same period in 2011, while futures trading rose by 60 percent in the first half, though Reitz said growth had slowed somewhat more recently.
But he reiterated worries about declining volumes in the EEX flagship product, power futures, which boomed last decade after successful liberalization.
This was due to the effects of recession in the region and the changing fuel mix in favor of more renewables, he said.
“(Power) traders are reluctant to take up long-term positions,” said Reitz. “That is a consequence of regulatory uncertainty and questions about the future market design.”
The power futures volume on EEX in the first half of 2012 was down 22 percent year-on-year at 481 terawatt hours (TWh).
Reporting by Vera Eckert; Editing by Catherine Evans