Image courtesy of www.globalbankingandfinance.com

Image courtesy of www.globalbankingandfinance.com

With state-backed incentives on the wane, European PV portfolio owners may find better deals in the continent’s increasingly sophisticated intraday energy markets. 

European PV portfolio owners look set to benefit from growth in intraday energy trading markets as state support for renewables fades.

Day-ahead and intraday trading is already gaining in importance compared to longer-term trades in a number of European energy markets, according to reports.

In April, for example, Reuters noted that spot volumes had grown by 25% over the last five years, against a background of declining energy trading activity overall.

Day-ahead and intraday volumes on the Epex Spot in Paris, which covers France, Germany, Austria and Switzerland, have grown 13% year-on-year, with same-day deals taking off in the German and Austrian markets in particular.

“The rise of renewable energy is delivering a boost to Europe's declining power market as traders get busy in short term deals to juggle unpredictable supplies of wind and solar,” Reuters reported.

“Exchanges show more trade as suppliers buy and sell power closer to when demand will appear, to meet their delivery obligations, because electricity cannot be stored effectively. New players are also attracted by lower capital requirements and risks.”

The same month, Bloomberg said Epex Spot same-day trades had risen 33% during the course of last year and were expected to climb further in response to growing renewable energy penetration across Europe.

“Long-term power volumes in Germany dropped 36% in the past five years,” Bloomberg confirmed. “Those of near-term contracts rose 25% and now make up 15% of Europe’s power trading, according to data from Prospex Research Ltd, a consultant in London.”

Energy market advocates say the rise of intraday trading is good news for renewable energy suppliers, transmission and distribution system operators, and electricity users alike.

“We think renewables should be pushed to participate in the electricity market,” said Pietro Baldovin, regulatory and policy associate of the European Federation of Energy Traders.

“In periods of high demand and undersupply, renewable generators can find a better way to be rewarded. And in times of oversupply, renewable energy suppliers will have incentives to curtail production and reduce the electricity delivered into the grid, according to market price signals.”

For system operators, one of the advantages of involving renewable energy suppliers in intraday markets is that it encourages the project owners to improve their forecasting to better match supply with demand. This enhances grid stability by preventing overflows or shortfalls.

It also helps prevent loop flows, which are said to threaten the development of Europe’s internal energy market.

For electricity consumers, the main argument for pushing renewables towards energy trading is economic, because it helps reduce the amount of money that taxpayers have to pay for feed-in tariff support.

While there appear to be some clear benefits to pushing for greater use of trading, the fact remains that facilities for doing so are still patchy across Europe. Not all markets are able to offer trades at the 15-minute intervals best suited to renewables, for example.

Germany, covered by the Epex Spot, is leading the way following the approval of an energy reform last year that encouraged renewable project owners to participate directly in the markets, as part of moves to wean the sector off feed-in tariffs.

Scandinavia also has a highly liquid market, served by Nord Pool Spot, which is the European leader for short-term contracts, Reuters says.

According to reports, Epex and Nord Pool are due to join forces with APX Group of Amsterdam to offer Europe-wide intraday trading later this year. That could be another excuse for renewable energy providers to place a bet on short-term trades.  

Renewable energy trading will be one of the topics under discussion at the Solar Asset Management Europe event this October in Milan, Italy. Register now for your early bird discount. 

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