Cross-border trade between Estonia, Latvia and Lithuania Baltic Energy Summit 2015, Vilnius
PageAivaras 1 Simkunas 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 Axpo Trading CKW Andreas Heiz Domenico de Luca Felix Graf
Page 2 Axpo Trading: 5 hubs, 20 countries, 34 energy markets
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100 Locations Western Europe Eastern Europe Italy Iberia 50 Northern Europe Shah Deniz Gasfield
150 Page 3 Cross Border Trading in the Baltics Why is it hot right now?
. Large price movements - high uncertainty 60.00
. Speculation on the price level and flows 50.00
. X-border trading from physical short-term to implicit 40.00 auctioning and to from bilateral to long-term financial. EE 30.00 . Imports from 3rd countries PL LT . Nasdaq OMX Commodities and PTR auctions 20.00 FI SPOT
. «Cross Border Trading» 10.00 . Short term optimization, balancing. - . Hedging retail portfolio 1 2 3 4 5 6 7 8 9 10 11 . Proprietary Trading 2015 2015 2015 2015 2015 2015 2015 2015 2015 2015 2015
Page 4 Insert presentation title in the footer spaces Cross Border Trading in the Baltics Where, when, why and how
. New interconnectors changes the market fundamentally
. Fully integrated market with increased cross border flows SE2 SE1 NO4 . Flows are assigned by algorythm and distributed most optimaly and efficiently. NO1 SE3 FI RUS
. Possibilities to trade cross border spreads via Nasdaq OMX SE4 EE . Merging Nordic market liquidity with Baltic market PL LT LV . Imports from Russia and Belarus still short-term and phsyical KAL BEL
Page 5 Insert presentation title in the footer spaces Energy flow according to DS Futures Q3-16 Area DS Futures
. Flow expectations 43.00 according to the futures market 38.00 . Price indicates flow 33.00 . Flow from low price Poland to high price area Latvia 28.00 Finalnd Estonia Malmo . Hourly and monthly 23.00 profile results in
different flows through18.00 the year
Source:http://www.nasdaqomx.com/ Page 6 Insert presentation title in the footer spaces Hedging with Forwards and PTRs Building blocks and corresponding risks
2015 25 20.00
20 15.00 PTR Price 15 10.00 FI – EE DIfference 10 Tallinn EPAD 5.00 Latvian/LithuanianHelsinkiLatvian EPAD Price Price Price 5 Estonian Price 0.00 0 System Price -5 -5.00
PTR LT-EE delivered Diff
Source:http://www.elering.ee/ Page 7 Insert presentation title in the footer spaces Yearly PTR auction result comparison Strategy overview
. PTR as isolated product delivered higher than traded (Speculation) . PTR + Forward (complete hedge strategy) different results . Gap between traded PTR and delivered is lowering
14.00 7.00 60.00 6.00
12.00 6.00 50.00 4.00
10.00 5.00 40.00 2.00 8.00 4.00 PTR PTR + Forward 30.00 - 6.00 3.00 Delivered Delivered Area Diff 20.00 -2.00 Diff 4.00 2.00 Forward market price Forward market price 2.00 1.00 10.00 -4.00
- - - -6.00 YR - 2014 YR - 2015 YR - 2016 YR - 2014 YR - 2015 YR - 2016
Source:http://www.elering.ee/ Page 8 Insert presentation title in the footer spaces Source:http://www.nasdaqomx.com/ Yearly PTR auction vs financial market Impact on forward prices
. What is the impact? PTR Auction 40.00 . Volumes: 38.00 . Monthly: 50 – 150MW 36.00 . Quarterly: 50 – 100 MW 34.00 . Yearly: 200 – 300 MW Poland 32.00 Latvia Finland 30.00 Estonia
. PTR is a snapshot in the timeline 28.00 Malmo
. Large interest to fully hedge the LT&LV area price 26.00
. More buyers on the Finish Price area 24.00
14/10/2015 16/10/2015 18/10/2015 20/10/2015 22/10/2015 24/10/2015 26/10/2015 28/10/2015 30/10/2015 01/11/2015 03/11/2015 05/11/2015 07/11/2015 09/11/2015 11/11/2015 13/11/2015 15/11/2015 17/11/2015 19/11/2015
Source:http://www.elering.ee/ Page 9 Insert presentation title in the footer spaces Source:http://www.nasdaqomx.com/ DS Futures on Nasdaq OMX System price + EPADs – Front Year Contracts
52.00
47.00
2 014 42.00 2 015 2 016 37.00 Poland Latvia 32.00 Finland Estonia Malmo 27.00
22.00
Source:http://www.nasdaqomx.com/ Page 10 Insert presentation title in the footer spaces DS Futures on Nasdaq OMX System price + EPADs – Front Year Contracts
16.00 . Steep price increase of FI price area against MAL. 14.00 . Looks like Latvian price is calculated as FI + PTR 12.00 . Increased difference between LV and Malmo 10.00
8.00 LV-SE4 FI-SE4 6.00 LV-FI 45.00 40.00 4.00 35.00 30.00 Poland 25.00 2.00 20.00 Latvia 15.00 Finland - 10.00 Malmo 5.00 - Q+1 Q+2 Q+3 Q+4
Source:http://www.nasdaqomx.com/ Page 11 Insert presentation title in the footer spaces Contacts - Axpo Nordic AS
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]
Source: http://www.nordpoolspot.com
Page 12 Many thanks for your attention
Axpo Nordic AS | Tjuvholmen Allè 3 | N-0250 Oslo
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