From 14 to 17 June the digital Energy markets week shed some light on a wide array of energy trading related topics.
The week kicked off with a discussion that evolved around the question of whether the energy market design is still fit for purpose.
Jérôme le Page, Director of European Electricity Markets at EFET who moderated the session said that our current market design still is fit for purpose, but that more work on the implementation still needs to be done.
Mathieu Fransen, Policy Officer at the European Union Agency for the Cooperation of Energy Regulators (ACER), for example, said that improvements are needed to the day ahead and intra-day markets, integration of balancing markets and review and redefinition of bidding zones “to better align the market with physics”.
An interesting moment was the comment from Christian Baer, Secretary-General of the European energy exchange association Europex, about the “elephant in the room”: the 70% renewable energy target by 2030. “We need to continue modernising and building more grids, otherwise we won’t reach those other targets,” said Baer.
Hélène Robaye, Head of Regulation & Market Design at Engie, emphasised the need for flexibility procurement by TSOs and DSOs via transparent public tendering and ensuring that balancing market procurements are market-based.
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On Tuesday, Gavin Ferguson, Head of the Standardisation Workstream at EFET, Geert van Wijngaarden, Head of Backoffice Energy Trading, EWE and Lorenzo Celio, Head of Back-office coordination, Alpiq shared their experiences with electronic Settlement Matching (eSM). The purpose of this is to shortening settlement timescale, benefitting credit risk exposure.
All panellists emphasized the importance of scaling up the use of eSM. Only by getting everyone involved, both big and small trading houses, the biggest benefits will be achieved. Companies should prepare their accounting and payment processes, but said van Wijngaarden: “You don’t need a full-fledged eSM implementation project that takes years to participate”.
Large energy users
The role of industrial energy users in the energy markets of the future was discussed on Wednesday. Christiaan Geers, Manager Tactical Resources at SAPPI Europe and Jeroen Verbeeck, Sourcing Director, Centrica Business Solutions showed a beautiful example of how an energy-intensive company can use its flexible capacity, aggregate demand response and storage to a band of reliable power to help to balance the grid.
Eliano Russo, Head of e-Industries at Enel X, described the macroeconomic trends for industrial energy users, “companies that originally wanted to have cheap power, now want efficiency, sustainability, resiliency, power quality and this represents a tremendous opportunity for all of us”. According to Hans Grünfeld, Director at Royal VEMW, it is not easy to balance commercial success with increasing environmental responsibilities and that is why their role in Energy markets is so important. “There is no decarbonisation of energy markets without decarbonisation of the industry and vice versa”. The panellists discussed various interesting examples of how industrial energy users can provide flexibility.
How to establish a future hydrogen market
On the last day of the Energy Markets week, a female panel moderated by Doug Wood (EFET) discussed the future of hydrogen markets. What should we focus on for developing a European Hydrogen market? According to Giusi Squicciarini, Head of Regulatory and External Affairs at Shell, “we need a consistent regulatory framework across the EU with access to liquid markets for molecules and to an EU-wide integrated market for GO’s and certificates, that caters for the blending pathway and the hydrogen networks pathway and that enables a level playing field.
Further Reading: how-to-create-a-hydrogen-market-in-europe
Felicia Mester, Senior Policy Advisor at Hydrogen Europe, is actually looking for a ‘dedicated hydrogen GOO’. “Of course the idea of having a pan-European certification system is a good one in principle. However, it doesn’t convey the trustworthiness that end consumers want to see,” she says.
To establish a hydrogen market, the most practical way would be to extend existing gas regulation to hydrogen. Ilaria Conti, Head of Gas at Florence School of Regulation says: “This would bring the most benefits in a short time. If we want to accelerate the move from vision to action, we have to look for practical solutions.”
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