Svenska kraftnät's summary of EPAD auctions during quarter 2, 2024
Svenska kraftnät has compiled the results of the auctions of EPAD contracts conducted during the second quarter of 2024.
Svenska kraftnät can conclude that the auctions during the second quarter has continued to work well and that both participation and price formation show a continued interest from market participants. Furthermore, Svenska kraftnät assesses that that it is still difficult to recognize any positive trend regarding the turnover in continuous EPAD trading, which decreased during the second quarter. However a relatively stable price trend is noted for the annual contracts.
The primary purpose of the auctions is to contribute to improved hedging opportunities for market participants, so-called market support. This means measures taken to increase liquidity and reduce uncertainty in the financial electricity market. The auctions add volumes, support price formation, price discovery and to some extent adjust any underlying market asymmetry.
The EPAD auctions arranged in Svenska kraftnäts pilot have had a positive effect on bilateral hedging. Recently the Swedish Energy Markets Inspectorate (Ei) published a study commissioned by the agency focusing on bilateral hedging. The report states that the bilateral market is dependent on a liquid and transparent market for exchange trading. It also states that EPAD auctions provide important price references for bilateral EPAD negotiations and that the benefit of the auctions is thus not only the actual transactions, but primarily transparency.
Svenska kraftnät hopes that the positive effects will eventually spread to market participants of all sizes and to private customers. Our ambition is to support the market in a way that also makes it easier for end users to find competitive fixed price agreements.
More information:
The quarterly report from quarter 2, 2024 (.pdf) Opens in a new window
Bilateral hedging of electricity in Sweden - konsultrapport DNV