N2EX strongly supports Scottish and Southern Energy’s (SSE) announcement from 12 October 2011 about committing its demand volume to the day-ahead wholesale market. This is a bold step to support an acknowledged model for trading within wholesale electricity markets, and could be the first step to a transformation in the UK market.
The N2EX day-ahead auction, operated by Nord Pool Spot and NASDAQ OMX Commodities, is based on the Nordic day-ahead auction model. N2EX is thereby exporting experience and adding value learned from the Nordic to the UK wholesale market.
“The commitment by SSE is a strong signal that the model used in the Nordic market and implemented throughout most of Europe is adaptable for the UK market as well,” says Hans Randen, Director European Integration at Nord Pool Spot.
“The aim is to create an efficient and transparent market with a credible index price for the UK wholesale electricity market,” he continues.
SSE’s commitment to the day-ahead market is important. N2EX believes their stance will encourage other members to follow. High volumes will bring depth and liquidity to the bid offer stacks, giving smaller participants greater confidence in the market.
“We welcome the recently announced initiative from SSE and the on-going growth in both volume and participation at N2EX, as it is most encouraging to the broader development for the UK market,” says Sara Aadnesen, Director Communications, NASDAQ OMX Commodities
.
“The day-ahead auction and its corresponding index lie at the heart of our plans for creating a liquid and transparent UK market for both near term and long term contracts. We believe that the increased depth in this reference price bodes well for future growth in our derivatives contracts for UK power,” she says.
Creating a transparent and liquid index price in the UK market is important to achieve market coupling with mainland Europe. Having solid fundamentals is also a requirement for developing a liquid futures market.
Total volume traded on the N2EX auction since Friday 14 October 2011 is 374.6 GWh, giving an average daily volume of 75 GWh the last five days. As of today there are 32 members trading on the exchange.
