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European power trading volumes rise as markets adapt

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Staff writer ▼ | March 9, 2016
New report from ICIS shows stronger liquidity and shifting trends with renewable energy.
Europe energy
Energy market   Shifting trends in renewable energy
Trading on the over-the-counter (OTC) European power markets increased in 2015 year on year, while the expansion of renewable energy has led to a shift in trading patterns.

Germany remains the largest electricity market in Europe, and traded volumes have begun to grow again, despite ongoing low prices.

However, French market participation has increased, and it has now overtaken the UK to become Europe's second most liquid power market.

Another trend is the move towards trading contracts for shorter and more immediate delivery. Wind and solar generation accounts for more of Europe's generation mix than ever before. The uncertainty over supply has created a greater need to trade.

"Growing trading volumes are good news, while more short-term trading shows the markets are adapting to new generation," says Zoe Double, head of power at ICIS.

"The more trading in European power markets, the stronger the price signal, and the more responsive companies can be in allocating resources and spreading their risk."

European energy policy promotes energy trading, but slower economic growth across Europe in previous years and consequent lower demand has affected the amount of electricity changing hands in the markets.

Falling energy prices have also played a part - with lower prices and less volatility, some liquidity providers have chosen to focus on other areas for trade, pulling out of many European markets.

Most European power is still traded 'over-the-counter' in most power markets, although individual markets vary significantly.