EEX - the marketplace for energy: supply and demand determine the price
" What do you think we should buy the small electric car - and to collect from the father state, the 4,000 euro premium ? But what if the electricity costs rise again? No problem, then I'm going to Leipzig and get me there a few thousand kilowatt hours for a low fixed price. "
Of course, a fictitious dialogue, except for the said market place for energy. That actually exists in the Saxon metropolis. More precisely, Leipzig is the seat of the European Energy Exchange (EEX), a stock exchange for energy and energy-related products. Above all, the suppliers of electricity and gas are negotiating with energy suppliers about delivery quantities and prices - but the average consumer has no access!
Even electricity is now a commodity
Anyone who buys regularly at the weekly market knows how the hare runs: Was For example, the cherry picking good and abundant, the prices for the favorite fruit are affordable. Especially if the dealers in bad weather wait in vain for buyers, so the demand is correspondingly low. Quite different, if the harvest failed badly and the supply is therefore scarce. Just today, the market is jam-packed. The traders can then sell their fruit at a price that makes their cash register ring so nicely.
This principle of supply and demand also applies to the energy exchange EEX. The goods offered are primarily electricity and gas, as well as CO2 certificates (emission allowances) and coal. Here we concentrate on the electricity, which, in contrast to other forms of energy, can not be stored, ie must be sold promptly. Suppliers are European producers that generate electricity from coal, gas and nuclear power plants on the one hand and from renewable energy sources such as hydropower, wind, solar, geothermal or bioenergy.
The demand side is home to the country's utilities, which supply four large groups: industry, households, commerce and service providers as well as authorities / public authorities. While a supplier can estimate quite well how many megawatt hours (MWh) or even terrawatt hours (TWh) its industrial customers need at certain times, the power consumption in private households is not a constant size. Among the known consumption peaks here include the evening hours between 19 and 21 clock, when many people at home both light and various devices such as stove, TV, computer or washing machine turn on. But nocturnal sports broadcasts, for example at the Olympic Games or a football World Cup, can increase the power requirement even at unusual times. The same applies to a sudden cold snap in winter or for a misjudged heat period in the summer. And who knows today what electricity needs in the near future will trigger millions of electric cars at what time of the day or night.
Buy and sell when the price is right.
It's obvious that utilities have a lot of experience and need intelligent purchasing management so that they can provide enough power reserves for every peak demand. But at what cost? How exactly does supply and demand become a price that both sides accept? A multi-layered process that can be summarized in a simplistic way: power producers tell the exchange what volume of electricity they can deliver at a minimum price set by them. On the demand side, utilities name the desired quantity and the maximum price they are willing to pay. From all available offers and inquiries, the EEX computer now calculates a so-called Clearing Price . This is usually the price at which both the majority of electricity generators and most utilities can negotiate. In other words, a price is constantly being determined here at which the most electricity can be sold.
The EEX Group: spot market, futures market and more
Prior to the liberalization of the electricity market in Germany, such price mechanisms did not exist. Only with the amendment of the Energy Industry Act (EnWG) of 1998 was the electricity ultimately a commodity. Since then, every customer - whether industrial or household - can choose their energy supplier. As a result, quite new forms of trading developed in the energy sector. In 2002, the merger of the German electricity exchanges Frankfurt and Leipzig created EEX. As stated on the website (www.eex.com), "it has since evolved from a local power exchange into a leading energy trading center in Europe (...) that engages in international partnerships and has a significant impact on European energy trading."
Similar to the well-known stock exchanges, the energy trading center EEX is a very complex entity. Two areas are particularly noteworthy:
- On the Power Spot Market , electricity products are traded for the same day (intra-day) or the following day (day-ahead). More than 500 terawatt-hours (TWh) were transacted here for the first time in the financial year 2015.
- The EEX derivatives market for electricity deals with energy trading transactions that can last up to six years into the future EEX's electricity derivatives markets recorded their success a new record volume of 2,537 TWh in 2015.
e: veen also buys energy on the stock exchange
The German electricity supplier e: veen Energie eG, headquartered in Hanover (www.eveen.de), has set itself the target of to offer its customers fundamentally more favorable conditions than the regional electricity supplier in the basic service tariff. To achieve this ambitious goal, e: veen buys the required electricity from EEX through a merger of more than 250 energy suppliers with a trading volume of around 15 billion kilowatt hours. This enables e: veen to buy the energy at wholesale conditions and pass it on to attractive customers at all times. Last but not least, this includes a price certainty of up to 36 months.
In addition, e: veen Energie attaches particular importance to sustainable and fair products, which certainly include energy from 100 percent hydropower. So if you want to get such a 'green current', you're in the right place with e: veen. The natural stream of the independent and cooperatively organized energy supplier is TÜV-SÜD certified, e: veen is also involved in ecological energy projects and is a partner of the campaign 'Energiewende in Bürgerhand' (www.buendnis-buergerenergie.de). The aim of the campaign is a secure, climate-friendly, ecological and decentralized energy supply that is in the hands of the end customer.
About the Author
The Düsseldorf journalist Klaus Jereb has been writing on financial topics, technology and customer service for many years. His numerous contributions also make complex topics understandable for everyone.