Leading the EEX electricity futures market in Japan after the first year

The European Energy Exchange (EEX) could double the number of participants in its Japanese electricity futures market to around 20 players in 2021, after trading more than 3 terawatt-hours (TWh) in its first 12 months, executives said.

Interest in wholesaling was boosted by extremely cold weather early this year, which left Japanese retail suppliers undercover, said Steffen Riediger, director of Power Derivatives at EEX, a unit by Deutsche Boerse.

Bad weather has highlighted Japan‘s dependence on imported gas for electricity, if nuclear and renewables do not provide enough supply.

“This demonstrated the rationale for covering supply gaps,” Riediger said in an interview. “He demonstrated the importance of futures contracts, especially those traded on exchanges, which eliminate counterparty risk.”

The 3 TWh EEX futures contracts traded in Japan since May 18, 2020 are equivalent to providing electricity to a city of 350,000 people for one year, Riediger said.

Although this is still small compared to Japan’s electricity consumption of 1,000 TWh per year, it shows the enormous commercial potential of a country with double the electricity consumption of Germany.

On its main European futures markets, EEX traded 4.7 TWh in 2020, up 19% from 2019.

EEX offers weekly, monthly, quarterly, seasonal and annual delivery times up to six years in advance, based on the index set by the local JEPX spot electricity exchange.

EEX’s freight and freight business spans all time zones, including North America.

“Japan has been a lot faster than we thought,” said Steffen Koehler, chief operating officer of EEX, comparing Japan to Germany’s one-year march to enter global markets. mature electricity.

EEX benefited from its clearing arm, ECC, known to international banks and brokers, who supported their clients.

In the first quarter of 2021, volumes traded in Japan stood at 2.32 TWh, or 96% market share, leaving the rest to local rival TOCOM.

Our standards: Thomson Reuters Trust Principles.

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