Power exchange wants to up the voltage
Trade volumes on the Polish Power Exchange (GE) are expected to pick up substantially when the electricity balancing market begins operating on an hourly basis next month, said Javier Alonso, GE's president.
Two months into trading on the infant exchange, volumes are lower than might have been expected. Although average daily volume in the first half of August exceeded 3,000 megawatt hours (MWh), recently it's been back down to July levels, which saw an average daily volume just above 1,600 MWh.
Last week, 2,547 MWh traded Tuesday at around zl. 98 per MWh on the day-ahead market, while 1,692 MWh traded Wednesday and 420 MWh Thursday. Prices are higher than the zl. 85 average paid in the exchange's opening week, but still below the roughly zl. 120 set by the Polish Power Grid (PSE) in bilateral contracts accounting for 65% of available power.
Alonso said he's confident the exchange can meet its year-end target of 10,000-15,000 MWh daily turnover. PSE, which settles the accounts of GE participants on a monthly basis, originally planned to kick-off an hourly balancing market alongside GE's July launch, but moved the date back three months because it needed more time to coordinate infrastructure. All legal and regulatory matters have already been dealt with, Alonso said.
The changeover to hourly settlements will allow GE's 31 participants to track investments more closely, he said.
"People will have much more opportunity to make a profit from one hour to another," Alonso said. "Not having the (hourly) balancing market is a constraint for our market."
Analysts said it is still too early to expect high trade volumes, especially considering long- and medium-term contracts setting prices for much of the market.
Trade volume in the range of several thousand MWh 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. GE has about 0.75% of the market through trading over its terminals and has stated it wants to have 5-8% by year's end.
GE announced Thursday that Sweden's Vattenfall had become its 15th shareholder after purchasing a 1% stake from Patnow-Adamow-Konin (PAK), which now owns 5% of GE. Alonso said that by the end of September three additional shareholders are to be chosen from a pool of 12 and will be the means for a capital increase.
Those eligible to trade on the exchange include 36 electricity generating companies, 33 distributors, 180 major consumers of electricity and brokers with licenses to trade energy. Minimum order sizes have been set at 100 kilowatt hours (KWh) and will be handled electronically, mostly over the internet.
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 soon. Prices are set hourly against a supply and demand curve.
