On 1 March 2001 at 10.00 in Frankfurt am Main the first German financial derivatives market for electricity trading got under way. Within the first two hours 20 participants from at least three countries, Austria, Germany, and Switzerland (French interests would presumably trade through its 25 per cent stake in ENBW, Swedish participants through holdings in HEW, Southern Co. through BEWAG, VASA through E.on and Fortum through EW Wesertal) clocked up 25 000 MWh of electricity via the Eurex electronic trading system.
At the end of the day a total trading volume of 40 716 MWh, representing 2.92 per cent of daily consumption in Germany, had been recorded, with a roughly equal split between peak load and base load power.
The recorded volume in the first two hours already exceeded the average daily volume on the EEX spot market, which commenced trading on 8 August 2000. On November 30 2000 EEX set a monthly record with some 470 000 MWh traded on the spot market.
On the second day of trading total volume reached 67 322 MWh of which 38 412 MWh was peak load. On March 5 at a press conference in London EEX director Hans Schweickardt announced that by late morning some 61 000 MWh had been traded of which 43 000 was base load and 17 300 was peak.
EEX seems to have pipped the LEX in Leipzig’s planned derivatives market, which will take a substantially different form. It may well be that the decision to drop trading charges for the first year had a considerable role in this success.
Few people in Europe believe that there is enough liquidity in Germany to support two derivatives market, and further competition from APX in Amsterdam would make business even more thin on the ground. Nonetheless EEX rather optimistically predicts that as much as 20 per cent of Germany’s typical daily consumption of 1.4 million MWh will eventually be traded.
