Infant power exchange volume low as expected
Participants either bought and sold minimal volumes of energy or simply watched from the sidelines during the Polish Power Exchange's (GE) first few days of real trading last week.
While daily volumes fluctuated between 4,867 and 56,734 megawatt hours (MWh) during the exchange's June 14-30 test run, last week's debut saw daily volumes as low as 483 MWh Sunday and as high as 2448 MWh Wednesday on the day-ahead market. Buyers paid zl. 79-zl. 88 per MWh, roughly 30% below the zl. 120 producers pay distributors per long-term contract arranged through the Polish Power Grid (PSE).
Out of the 22 signed participants 12 producers, eight distributors and two licensed energy traders only eight made genuine trades in the first few days, said Javier Alonso, GE's president, last Wednesday. A number of participants haven't yet joined the balancing market or reached agreements with clearing houses, said Agnieszka Szostek, GE's spokeswoman.
Although the exchange would not disclose which companies participated, the daily newspaper Puls Biznesu reported that on the first day of activity the only seller was Patnow Adamow Konin, the nation's second-largest power plant, and that the only buyers were distributors Energa and Gornoslaski Zaklad Energetyczny.
"My feeling is that the market is evolving O.K.," Alonso said. "We still have very few participants and low volume and that means there's a little bit more volatility ... (but) it's a good start."
Alonso said he expected activity to pick up after new regulations for the balancing market take effect. The balancing market through a recent agreement with PSE and sector-wide technology upgrades allows GE to balance supply and demand in real time.
Pawel Zach, senior research analyst at Citibank (Poland), described GE's low trade volume as natural for an infant exchange. During the Warsaw Stock Exchange's first session on April 16, 1991, he said, only five companies traded and volume was so small that only a few thousand zlotys changed hands.
"This is just the beginning," Zach said. "Hopefully the participants will find the exchange useful." But for the moment, he said, "the power exchange doesn't play any role in the power sector."
Trade volume in the range of several thousand MWh, Zach said, equals the amount of energy one medium-sized Polish power plant produces in an hour. Daily electricity consumption in Poland averages 326,000 MWh and 119 million MWh annually, Zach said. GE has about 0.75% of the market through trading over its terminals, he said.
That should notch up to around 5% in a few months, Zach said. GE's first-year goal is 5-8%, and 10-15% in 2001, Alonso told the Business Journal earlier.
Treasury Minister Emil Wasacz told a press conference last Monday that the parallel launches of the power exchange and balancing market are of primary importance to privatization in the energy sector. "I would like to express how happy I am that after almost a year of negotiations for operational rules, implementation of procedures, adopting regulations and agreeing on technical details and training we came to a point when tangible results of these tasks are visible," Wasacz said.
Around-the-clock trades over GE are conducted on a day-ahead market, meaning physical delivery of the electricity takes place the following day. Futures and options trading, as well as cross-border trading, are expected at some point in the future. Prices are set hourly against a supply and demand curve.
