Volumes on the Prague-based Power Exchange Central Europe in 2015 will hit their highest for two years, signalling new growth potential for the bourse looking to push further into central and southeastern Europe, the exchange's chief said. The exchange, which opened its doors in 2009, saw overall power and gas volumes surge 20 percent in 2015 due to growth in the Hungarian market and traders clearing over-the-counter deals on the exchange, PXE chief executive David Kucera said.
In power trading, volumes are expected to climb 4 terawatt hours (TWh) to 25 TWh from a year ago while gas volumes will be 3.2 TWh compared to 0.80 TWh a year ago, he said. Overall volume will touch the highest since hitting 29.7 TWh in 2013 and the second-highest since 24.3 TWh in 2010, Kucera added. "This means that in total 2015 will show one of best results in the last five years," he said in an interview on Tuesday.
"We saw higher interest in the exchange cleared deals at some market participants as the main driver for this result." Over the past nine years, bourses including the PXE have started operating in the Czech Republic, Hungary and Poland, hoping to tap into a potentially lucrative power market in a region with good grid connections and numerous borders over which to trade electricity.
Growth, however, has been slower than initially expected due largely to the region's slow economic rebound from the 2008 global financial crisis and a flood of renewable energy from Germany, which have combined to depress long-term power prices to all-time lows.
The Prague bourse - which also offers Polish, Slovak and Romanian futures contracts - will introduce new products and services in 2016 to fend off rival exchanges also seeking to win business by offering financially-settled products, Kucera said. One focus will also be on Hungary where price volatility has drawn traders into the market and helped generate electricity trading volumes there that will hit 5.7 TWh in 2015, up from 3 TWh a year ago.
While most trading of wholesale electricity in the region takes place in the over-the-counter market, the PXE has sought partnerships to help lower margin limits and make it easier for traders to access the exchange. Kucera cited a deal to clear its trades through Germany's European Commodity Clearing - a unit of Leipzig-based European Energy Exchange, as an example and said he sees more of such partnerships in the future. "In 2016 we would like to focus on increasing of liquidity in poorly performing products and prepare some improvements for traders," said Kucera, who said the exchange would detail the new offerings early next year.