Complex and compelling
Energy is the foundation of modern life, and energy trading plays a crucial role in keeping energy supplies secure, affordable and carbon-efficient.
In Europe, power trading is conducted via 30 or so power exchanges, via brokers, or over-the-counter (trades that take place outside of power exchanges without intermediaries or clearing houses).
Power exchanges operate in a similar way to regular stock exchanges.
For power traders, power exchanges offer Intraday trading (the continuous buying and selling of power on the same day as the power delivery) and Day-ahead auctions (power for the next day is traded for a dedicated hour or quarter-hour interval).
Gas trading in Europe is conducted on a dozen or active gas trading exchanges (known as gas trading hubs), via brokers, or over-the-counter.
Gas trading hubs operate in a similar way to regular stock exchanges, and offer short-term traders Intraday and Day-ahead options similar to those in the power marketplace.
Where traders map out and execute trading strategies, supported by analysts looking into all the factors that drive energy prices – e.g. pricing, weather, consumption and capacity data. To minimise delivery costs, scheduling and dispatching are also managed here.
Where the risk inherent in the company’s portfolio and the exposure of the business is managed on a day-to-day basis. This includes managing trader limits, credit and market risk, compliance and profit and loss reporting.
Where settlements and accounting are processed, collateral is supervised to ensure sufficient funds to clear deals, and where regulatory reporting and tax are managed.