- Prices help the market to project a 10-year revenue stream
- PPA investors in wind and solar power plants need visibility
- EEX offers standardized and financially settled futures contracts
- The movement applies to German, Italian and Spanish power
FRANKFURT, Sept. 27 (Reuters) – The European Energy Exchange (EEX) on Monday extended its annual electricity futures contracts for Germany, Italy and Spain to 10 calendar years from six currently, in the part of an initiative to help integrate renewable energy into wholesale trade. electricity market.
EEX, a subsidiary of Deutsche Boerse (DB1Gn.DE), is the world’s leading electricity exchange, where annual deadlines are price benchmarks for producers, consumers and investors in power generation.
The sector is changing rapidly as conventional production from fossil fuels like gas and coal gives way to the deployment of wind and solar power.
To finance the expansion of renewable energies, the market must move from state-guaranteed feed-in tariffs, which remunerate producers for energy fed into the grid, to other instruments to make infrastructure operational.
Power Purchase Agreements (PPAs) – long-term agreements whereby companies commit to purchase electricity from renewable energy producers – can help boost investment in renewable energy by guaranteeing the income of producers. They are increasingly popular, especially in Spain and Italy.
Because the picture of prices beyond the six years available on EEX has so far been cloudy, potential investors in the PPA have often felt stuck because they could not demonstrate to lenders that their proposals were backed by a plan. solid to hedge price risks.
Potential producers also faced similar risks due to reduced price visibility. The ten-year term currently offered on EEX changes that, said COO Steffen Koehler.
“The fact that we already have six annual deadlines improves the starting position of market players for new products,” said Koehler.
In turn, the stock market’s liquidity over the existing six years should receive a new boost from wider participation, he said.
EEX is striving to expand its role in the areas of environment, freight and other products to complement its flagship business in electricity and gas. Read more
Steffen Riediger, EEX director for European energy derivatives, said demand for renewable energy was increasing from the business sector keen to reduce its carbon footprint, and companies were looking for PPAs.
“The transactions that we will see will have huge volumes and face values,” he said.
The contracts will be posted on Refinitiv Eikon on this channel:
Reporting by Vera Eckert; Editing by Jan Harvey
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