EEX bourse prices power for up to 10 years to help push renewables roll-out

European Energy Exchange AG

27/09/2021 24:00

* Prices help market to project 10-year income stream
    * PPA investors in wind, solar power plants need visibility
    * EEX offers standardised , financially settled futures
    * Move applies to German, Italian, Spanish power

    By Vera Eckert
    FRANKFURT, Sept 27 (Reuters) - The European Energy Exchange
(EEX) on Monday expanded its yearly power futures contracts for
Germany, Italy and Spain to 10 calendar years ahead from six
currently, part of a move to help integrate renewable energy
into the wholesale power market.
    EEX, a subsidiary of Deutsche Boerse  DB1Gn.DE , is the
world's leading electricity exchange, where annual maturities
form price benchmarks for producers, consumers and investors in
power generation.
    The sector is changing rapidly as conventional production
from burning fossil fuels like gas and coal gives way to the
roll-out of wind and solar power.
    To finance the expansion of renewables, the market needs to
transition away from state-guaranteed feed-in tariffs, which pay
producers for energy fed into the grid, towards other
instruments to make infrastructure operable.
    So-called power purchase agreements (PPAs) - long-term deals
under which businesses contract to buy electricity from
renewable energy producers - can help drive renewable investment
by guaranteeing generators' revenues. They are becoming
increasingly popular, especially in Spain and Italy.
    Because the price picture beyond the six years available on
EEX has so far been murky, would-be PPA investors often felt
blocked because they could not demonstrate to lenders that their
proposals were backed by a solid plan to hedge price risks.
   Would-be producers also faced similar risks due to reduced
price visibility. The ten-year span now on offer on EEX changes
this, said Chief Operating Officer Steffen Koehler.
    "The fact that we already have six annual maturities
improves the starting position of the market participants for
the new products," Koehler said.
    In turn, the exchange's liquidity in the existing six years
should receive a further boost from wider participation, he
said.
    The EEX is striving to widen its role in environment,
freight and other products to complement its flagship power and
gas business.  urn:newsml:reuters.com:*:nL5N2OD5H3
    Steffen Riediger, EEX's director for European power
derivatives, said demand for renewable power was rising from the
corporate sector keen to reduce its carbon footprint, and that
companies were seeking PPAs.
    "The deals we will see will have massive volume sizes and
massive nominal values," he said.
    The contracts will be displayed on Refinitiv Eikon on this
chain:  0#DEBY: 

 (Reporting by Vera Eckert; Editing by Jan Harvey)
 ((vera.eckert@thomsonreuters.com; +49 30 2201 33654;
@EckertVera;))