Germany report: Futures trading

On the downside, under the new system, the transmission operators (TSOs) will be excluded from futures trading on the wholesale electricity market since, under European law, TSOs are expected to run the networks and avoid engaging in energy trading.

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In due course, the further development of the nationwide equalisation scheme, AusgleichMechV, ruling foresees responsibility for renewables marketing being passed to one or more independent companies, probably chosen in a tendering procedure, which may be given the freedom to engage in futures trading as well as operating on the spot and intra-day markets with renewables.

Futures trading involves anonymous buying and selling of standardised financial instruments connected to a physical commodity - here electricity - for months, quarter years or years ahead, often for the purpose of hedging. Market players can sell futures contracts to hedge against falling electricity prices, or buy futures contracts to safeguard against rising electricity prices. Under European law, TSOs are supposed to run the networks and not engage in trading.

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