European regulation has, for some time, required that Nordic regulators keep a watchful eye on power price hedging opportunities in their markets. However, a combination of new interconnectors between power markets, new alternatives for long-term hedging, declining liquidity in the Nordic futures market and Norway’s expected implementation of the relevant European regulation mean that questions about power price hedging have never been more pressing.
The studies will be conducted for the Swedish, Danish and Norwegian national energy regulators and seek to review market participants’ current hedging opportunities, as well as whether regulatory changes are warranted to try and improve them. Among the issues of interest is the increased prevalence of long-term hedging activity through the use of Power Purchasing Agreements. These agreements allow buyers and sellers to lock in prices for periods of fifteen years or more. Also relevant is Norway’s imminent interconnection with the German and British markets, raising the question of whether capacity on the associated interconnectors should be auctioned to the market for use in power price hedging.
As part of this work, THEMA will be interviewing a variety of market participants in all of the relevant markets, and organisations with price exposure in the Nordics are invited to participate in an online survey (More information can be found here). These participants can also receive an anonymised version of the final report.
