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Cross-border trade between Estonia, Latvia and Lithuania
Baltic Energy Summit 2015, Vilnius
Aivaras Simkunas
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Leading Swiss energy company
Electricity for approx. 3 million people in Switzerland
Over 4000 employees
116 power plants
Swiss energy company owned by the north-eastern Swiss cantons
Active in 20 countries across Europe
Active along the entire value chain
Power production
Power distribution
Power trading
Power sales and services
Axpo Group
Andrew Walo
Axpo Power
Andreas Heiz
CKW
Felix Graf
Axpo Trading
Domenico de Luca
Page 3
Axpo Trading: 5 hubs, 20 countries, 34 energy markets
Eastern Europe
Italy
Northern Europe
Western Europe
Locations
Shah Deniz Gasfield
Iberia
35
100
50
150
60
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Large price movements - high uncertainty
Speculation on the price level and flows
X-border trading from physical short-term to implicit
auctioning and to from bilateral to long-term financial.
Imports from 3rd countries
Nasdaq OMX Commodities and PTR auctions
«Cross Border Trading»
Short term optimization, balancing.
Hedging retail portfolio
Proprietary Trading
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Cross Border Trading in the Baltics
Why is it hot right now?
-
10.00
20.00
30.00
40.00
50.00
60.00
1 2 3 4 5 6 7 8 9 10 11
2015 2015 2015 2015 2015 2015 2015 2015 2015 2015 2015
EE
PL
LT
FI
SPOT
Page 5
FI
SE1
SE4
BEL
SE3
SE2
KAL
RUS
LT
NO1
LVPL
EE
NO4
New interconnectors changes the market fundamentally
Fully integrated market with increased cross border flows
Flows are assigned by algorythm and distributed most
optimaly and efficiently.
Possibilities to trade cross border spreads via Nasdaq OMX
Merging Nordic market liquidity with Baltic market
Imports from Russia and Belarus still short-term and
phsyical
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Cross Border Trading in the Baltics
Where, when, why and how
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Energy flow according to DS Futures
Q3-16 Area DS Futures
Flow expectations
according to the
futures market
Price indicates flow
Flow from low price
to high price area
Hourly and monthly
profile results in
different flows through
the year18.00
23.00
28.00
33.00
38.00
43.00
Poland
Latvia
Finalnd
Estonia
Malmo
Source:http://www.nasdaqomx.com/
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Hedging with Forwards and PTRs
Building blocks and corresponding risks
System Price-5.00
0.00
5.00
10.00
15.00
20.00
-5
0
5
10
15
20
25
2015
PTR LT-EE delivered Diff
Tallinn EPAD
Estonian Price
Helsinki EPAD Price
FI – EE DIfference
PTR Price
System Price
Estonian Price
Latvian PriceLatvian/Lithuanian Price
Source:http://www.elering.ee/
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PTR as isolated product delivered higher than traded (Speculation)
PTR + Forward (complete hedge strategy) different results
Gap between traded PTR and delivered is lowering
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Yearly PTR auction result comparison
Strategy overview
-6.00
-4.00
-2.00
-
2.00
4.00
6.00
-
10.00
20.00
30.00
40.00
50.00
60.00
YR - 2014 YR - 2015 YR - 2016
PTR + Forward
Delivered Area
Diff
-
1.00
2.00
3.00
4.00
5.00
6.00
7.00
-
2.00
4.00
6.00
8.00
10.00
12.00
14.00
YR - 2014 YR - 2015 YR - 2016
PTR
Delivered
Diff
Forward market price Forward market price
Source:http://www.elering.ee/
Source:http://www.nasdaqomx.com/
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What is the impact?
Volumes:
Monthly: 50 – 150MW
Quarterly: 50 – 100 MW
Yearly: 200 – 300 MW
PTR is a snapshot in the timeline
Large interest to fully hedge the LT&LV area price
More buyers on the Finish Price area
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Yearly PTR auction vs financial market
Impact on forward prices
Source:http://www.elering.ee/
Source:http://www.nasdaqomx.com/
24.00
26.00
28.00
30.00
32.00
34.00
36.00
38.00
40.00
14/1
0/2
015
16/1
0/2
015
18/1
0/2
015
20/1
0/2
015
22/1
0/2
015
24/1
0/2
015
26/1
0/2
015
28/1
0/2
015
30/1
0/2
015
01/1
1/2
015
03/1
1/2
015
05/1
1/2
015
07/1
1/2
015
09/1
1/2
015
11/1
1/2
015
13/1
1/2
015
15/1
1/2
015
17/1
1/2
015
19/1
1/2
015
Poland
Latvia
Finland
Estonia
Malmo
PTR Auction
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22.00
27.00
32.00
37.00
42.00
47.00
52.00
2 014
2 015
2 016
Poland
Latvia
Finland
Estonia
Malmo
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DS Futures on Nasdaq OMX
System price + EPADs – Front Year Contracts
Source:http://www.nasdaqomx.com/
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DS Futures on Nasdaq OMX
System price + EPADs – Front Year Contracts
-
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
LV-SE4
FI-SE4
LV-FI
Steep price increase of FI price area against MAL.
Looks like Latvian price is calculated as FI + PTR
Increased difference between LV and Malmo
-
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
45.00
Q+1 Q+2 Q+3 Q+4
Poland
Latvia
Finland
Malmo
Source:http://www.nasdaqomx.com/
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Contacts - Axpo Nordic AS
Source: http://www.nordpoolspot.com
Address:
Axpo Nordic AS
Tjuvholmen Allè 3
N-0250 Oslo
Tel. +47 22 01 84 00
Fax +47 22 01 84 29
Webpage: www.axpo.com
Contacts:
Aivaras Simkunas, Originator Baltics +47 900 33 55 6 [email protected]
Kjetil Holm, Head of Origination +47 22 01 84 08 [email protected]
Matti Ahtosalo, MD Axpo Finland OY +358 500 837893 [email protected]
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Many thanks for your attention
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Axpo Nordic AS | Tjuvholmen Allè 3 | N-0250 Oslo
