The majority of market participants told us that they perceive opportunities to hedge power price risk in the Nordic market as insufficient. The concerns raised are not limited to specific bidding zones or any specific type of market actor. Rather, they appear to reflect more widespread challenges in hedging area price risk within the Nordic system and a lack of liquidity in the market for EPADs – the financial contracts designed for doing so.
Our discussions with market participants covered the factors contributing to low liquidity as well as, perhaps most importantly, options for improving liquidity in the future.
European energy market regulation places an obligation on the Swedish and Danish energy regulators to review the sufficiency of cross-border hedging opportunities in their markets. THEMA has been leading work to better understand how market participants hedge power price risk in Sweden, Denmark, and Norway and to capture participants’ assessment of market performance. As part of this work, we interviewed a broad spectrum of market participants and ran an online questionnaire. The public results of this study are now available and point to a widespread belief that current arrangements are not working.
Our study for the regulators collates the views of 61 market participants, gathered via 59 online questionnaire responses and 29 interviews. These participants reflect a diverse set of market participants, including generators, retailers, consumers, exchanges, brokers, and traders, and range from small local utilities to large international energy companies. They also cover all of the bidding zones within Sweden, Denmark, and Norway.
We will be hosting two webinars on hedging, covering some of the issues raised:
- May 5th 2021 09.00 – 10.00:
Hedging in the Nordic power market – Are sufficient opportunities available?
We summarise market participants’ views on the sufficiency of hedging opportunities, the nature of the challenges faced and suggestions for possible improvements based on our work for the regulators. A recording of the webinar can be seen here.
Presented by Julian Hentschel.
- May 19th 2021 09.00 – 10.00:
Weather risk and hedging opportunities in the Nordic market
We give an introduction to weather risk in the Nordic power market and look into different strategies to hedge this risk.
Presented by Marius Holm Rennesund.
Interested participants are invited to attend these free workshops.
The workshops will be streamed via Teams Live. If you do not have Microsoft Teams installed on your device, you can choose to join the session via the web app. You might be required to accept third-party cookies to join the session.
For the second webinar (May 19th) registration is required. If you are interested in participating, please contact email@example.com for further information and registration.