Strecker, Stefan; Weinhardt, Christof:

Electronic OTC Trading in the German Wholesale Electricity Market

In: Electronic Commerce and Web Technologies: First International Conference, EC-Web 2000, London, U.K., September 4-6 : Database and Expert Systems Applications (DEXA)
Berlin et al.: Springer (2000), S. 280-290
Buchaufsatz / Kapitel / Fach: Wirtschaftswissenschaften
Abstract:
Recent changes in the German energy policy initiated a deregulation
	process from a monopolistic to a competitive market, fundamentally
	changing the market structure, transaction relationships and trading
	processes. While the mutual exchange of electric energy has been
	a business activity between vertically integrated utilities for a
	long time, wholesale electricity trading in an open market only recently
	started to gain momentum. Electricity becomes a commodity traded
	at power exchanges and off-exchange on over the counter (OTC) markets.
	In Germany, the wholesale electricity market is dominated by OTC
	trading. Trading in OTC markets is usually performed via telephone
	and facsimile which leads to a limited price transparency, a limited
	liquidity, an ex ante restricted number of potential market partners
	and, last but not least, substantial transaction costs. Market participants
	are therefore searching for new trading mechanisms to circumvent
	the problems of the current trading processes. The electronization
	of trading activities promises to reduce the disadvantages of current
	OTC trading processes through the automation of tasks within the
	transaction chain. In this context, electronic markets for electricity
	trading are coordination mechanisms for the market exchange of electricity
	and electricity derivatives, i. e., a virtual market place where
	supply and demand meet and trade. An important feature of electronic
	markets is an automated dynamic pricing which is currently not supported
	by electronic markets available for electricity trading in the German
	wholesale market. A concept for an Electronic Electricity Trading
	System is therefore proposed with a main focus on automated price
	discovery.