This document discusses German power and electricity trading. It notes that German power is a successful trading product because it fulfills the criteria for perfect competition, including a homogeneous product, large number of diversified buyers and sellers, and a standardized regulatory framework. It also discusses why Nordic traders should care about German power given the goals of the European Energy Union and common long-term price drivers across Europe. The document provides details on the size and generation mix of the German power market and notes how increased transmission connections will further integrate German and Nordic power markets going forward.

1. Title C: long sample Headline in two
long lines with lots of information.
Sam Sample,
City, MM/DD/YY
German Power
- The European benchmark for electricity trading
Heine Rønningen,
NAET Annual Meeting, April 19th 2018

2.  Overall Liquidity > 6 k TWh
 Churn rate > 10
 Large number of Participants
 Several price drivers and strong
trends
German Power is a World Class Performer!
6/11/2018© 2017 2
Why is German Power such a successful trading product?
…simply because most important theoretical criteria for perfect competition are
fulfilled
Why should Nordic traders care about German Power?
...the Energy Union price convergence ambition and common long term price drivers
(coal, gas, emission...)

3. Market efficiency and liquidity cannot be created out
of thin air…
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Why is German Power such a successful trading product???
…most important theoretical criteria for perfect competition are fulfilled:
 Homogeneous product: Single large Bidding Zone allocated in the
center of Europe and the Energy Union ambition of price convergence.
 Large number of diversified buyers and sellers: Diversified
generation and consumption mixture as basis for hedging demand
 Regulatory Framework & Transparency: A standardized and
harmonized EU wide set of rules ensures efficiency and transparency
across the Energy Union.

4. Market coupling and Energy Union: past, present
and future…
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In the beginning there was Nord
Pool...
Great entrepenourship. Still, part of
the success was due to lack of
alternatives for traders...
Now it is the Energy Union...
Germany is the European electricity
hub connecting North, South, West
and East…
IC Plans.. CCR decission..Market coupeling history..

5. An Energy Union success induces price convergence
6/11/2018© 2017 5
Why trade the illiqiud locations when you can trade the hub?

6. The Phelix Bidding Zone…
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Size matters – Phelix is Europe's largest Bidding Zone
…+ diversified generation mix as basis for strong hedging demand:
 600 TWh Consumption in a single Zone (System price = 370 TWh / 12
BZ = 31 TWh each)
 655 TWh Generation consisting of Renewables, Lignite, Hard coal,
Natural Gas, Nuclear, Mineral Oil.....
 55 TWh net Export
October 1. 2018
BZ Split DE and AT
600 TWh
440 TWh
31 TWh
305 TWh
143 TWh

7. German Power - Consumption
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Stable consumption

8. German Power - Generation installed capacity
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Explosive Renewable growth from 18,5 – 112,2 GW

9. German Power - Actual Generation
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22%
79%
81%
42%
15%
33%
Capacity factor:
655 TWh total Generation
Takes a lot of Renewable capacity to replace the Coal and
Nuclear energy (Capacity factor 20% vs 80%)

10. German Power Export Balance
6/11/2018© 2017 10
Balanced Energy surplus
The energy surplus will influence surrounding markets. More
interconnectors needed to balance the market.

11. Changes to the Nordic interconnectors in the near
future…
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 German Power will strengthen its
significanse on Nordic Power in 2020:
 Increased utilization of current
interconnector DK-DE 1250 MW
 New interconnector DK-DE 1250 MW
 New interconnector NO2-DE 1400 MW
 System Price hedging relevance will be
challanged further with the new
interconnectors.
....which leads us back to the discussion
we had at the NAET autumn meeting
2017....
NordLink, commercial in 2020

12. Health report of the System price (update from
NAET autumn meeting)…
6/11/2018© 2017 12
Feb – Mar coldspell SYS BZ correlation dropped
Time to reconfigure System price with ambition to increase hedging value?
R squared values Sys - BZ

13. DK1 Bidding Zone correlates better with Phelix -
future correlation is expected to improve...
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PHELIX DK1 = R2 0,67 SYS DK1 = R2 0,52

14. The relative strength of German Power is here to
stay...
6/11/2018© 2017 14
 The preferred exchange for trading German Power (and other
European locations) is eex

15. European Energy Exchange
www.eex.com
Heine Rønningen
heine.ronningen@eex.com
+47 90 60 87 74