2017 Annual Report Investing for the Customer “ In 2017 we invested in consolidating deliveries, refining and fine-tuning them to better meet customer needs.” Erling Thiis Acting CEO 2 NORD POOL 4 Foreword 2017 7 Highlights Key facts 8 and figures Expanding 11 influence A Quiet 13 Revolution Platform 16 for Change Directors’ and 20 Financial reports ANNUAL REPORT 2017 3 Big Challenges — Small Changes Erling Thiis CFO and acting CEO When I found myself, in the autumn of ‘business as normal’ in 2017. The volume of continue to trade increasing volumes with 2017, unexpectedly stepping in as acting power traded through Nord Pool grew to us, and that new ones are attracted to what Chief Executive at Nord Pool, I was 512 TWh, with Nordic and Baltic day-ahead Europe’s leading power market has to offer. acutely aware that much of the year was market trading rising to a record 394 TWh, already behind us. We had spent that UK day-ahead achieving 111 TWh, and Nordic, Another area in which we can never afford to time making — for the most part — small, Baltic and German intraday reaching an become complacent is customer satisfac- incremental changes in the products and all-time high of 6.7 TWh — growth of 35 % on tion. Our annual customer survey is now an services we provide to our customers, to the 2016 figure. established part of our year. We value very make their lives simpler. highly the insight that the results give us into And we want to share our numbers — which what our customers are thinking and feeling The previous year had seen Nord Pool is why in 2017 we made all physical and about our performance and what they making some major deliveries; the externally operating data from Nord Pool markets need — or rather (quite rightly) demand — visible realisation of a serious investment by available free for power sector startups, from us going forward. Once again, in 2017, us in driving our technology forwards. So and launched a mobile app providing key our feedback scores were generally impres- perhaps 2017 was, for us, always destined to daily data for our day-ahead trading, giving sively high. I hope that proves that, even if be a year that was less about ‘show-boating’ traders daily prices while on the move. this was a year when we chose — in typically and more about quietly, but confidently, Scandinavian fashion — not to ‘blow our own working behind the scenes, investing in In times of increased competition between trumpet’ too much in public, our customers securing the efficiencies which we had put in power exchanges, achieving strong numbers fully appreciated that we had made an place, for the benefit of our customers. in our existing markets is both reassuring investment in consolidating the previous and encouraging. And I would particularly year’s deliveries, refining and fine-tuning For the record like to highlight the fact that in the UK them to meet their needs. Since my background is in finance you will Nord Pool continues to handle some two forgive me if I start the Foreword to our thirds of day-ahead power trading, while still If 2017’s customer feedback was over- 2017 Annual Report by addressing the confronting challenges that are not of our whelmingly positive, there were also some ever-present, and always important, own making in the intraday sphere. Imagine useful pointers in there about future subject of the numbers that illustrate our what would be achievable — and the benefits direction and developments. Rest assured performance through the year. This is an to UK customers — if there was ever to be a that we have listened to what our customers aspect of the power trading business that level playing field in UK intraday! have told us, taken it on board and will be will never, I think, go away nor diminish in acting on it. At Nord Pool we do not need a importance — and I am pleased to be able Delivering value weatherman to tell us which way the wind to say that Nord Pool’s numbers remain If achieving records is normal here at blows — our customers are already very healthy, competitive and growing. Nord Pool, that does not in any way mean good at doing that! that we have become complacent about the Our delivery of ‘record years’, year-on-year, need to deliver exceptional value for money Making our platforms and processes just has somehow come to be the norm at in the power trading world. Only by doing that little bit more efficient, contributes Nord Pool. And, in that respect, it was that can we ensure that current customers towards our wider vision as a business of 4 NORD POOL “ We have been quietly, confidently, working behind the scenes; investing in securing efficiencies for the benefit of our customers.” realising completely seamless, joined-up of it at least, common goal of pan-European power trading. In particular it was our efforts market coupling. In 2017 these apparently in clearing and settlement during 2017 which, opposing objectives seemed to continue I feel, really set us apart from other power to be largely irreconcilable for some of exchanges. We were very pleased to start the parties involved. How then are we to the year by launching our successful single bring-together objectives which seem web-based clearing and settlement interface increasingly to clash, head-on? CASS to our Nordic Baltic and German markets. A small thing perhaps — but it One means to address this might be the allows customers in all our markets to follow unbundling of market coupling from power the entire transaction lifecycle from trade to exchange functions, practical actions payment. which could, perhaps, anticipate some matching evolution on the regulatory side. Facing our challenges At Nord Pool we pride ourselves on an What seems not to change, from year-to-year, innovating and pioneering spirit — finding are some of the fundamental challenges that new and different ways to get the job done. we face at Nord Pool. Perhaps, when we cannot see support coming from external parties in the regula- The key regulation for power exchanges tory field, we need to look at ways in which stipulates that we compete with each other, we can help ourselves. while also working towards the, on the face ANNUAL REPORT 2017 5 We increasingly see that such important This is a truly innovative development to regulation as Capacity Allocation and create the power market of the future, Congestion Management (CACM) for allowing local power production and example, which has been in place now consumer flexibility to work efficiently for two years, is imprecise and unclear for together. those who must deal with it ‘on the ground’. That makes matters very difficult — and we As we look to the future, it is important welcome any initiative to review and revise that I thank all of our customers and other CACM, with an eye towards adapting it to stakeholders for their continuing support better deal with both regional challenges throughout the year. More important even in the power system, and with competitive than the fact that you choose to trade with realities. us, is the input you provide into what we do, to ensure that we are on the right track and XBID, the cross-border intraday project, is continuing to deliver efficient, simple and another area where implementation in a secure power trading, where, when and how meaningful way which will allow the platform you need it. to attract the all-important liquidity, is chal- lenging. At Nord Pool we are working hard Finally, on a personal note, as I prepare to to ensure that XBID is implemented so as hand over the reins of Nord Pool to a new to permit the maximum sharing of liquidity Chief Executive, I would like to state how across Europe. At the end of the day we honoured and proud I have been to serve in firmly believe that the greatest losers, if local this capacity. Calling upon the vast compe- liquidity is widespread, will be customers. tence, experience and expertise that we hold among the staff, stakeholders, supporters A glimpse of the future and partners of Nord Pool, has made serving We ended the year with our sights firmly as Chief Executive both an education and a focused on the future, announcing the real pleasure. partnership with energy company Agder Energi to jointly develop a new marketplace I am confident to say that Nord Pool’s new to exploit decentralised flexibility. Chief Executive inherits a business that has, at its heart, the best interests of the most important people of all — its customers. 6 NORD POOL 2017 Highlights January June November Our new and efficient web-based Clearing We unify our rulebook to make conducting Nord Pool announces plans for a new and Settlement System (CASS) is launched business across our markets more efficient, cross-border intraday auction concept for all customers in our Nordic, Baltic and simple and secure. This is the culmination for Germany in early 2018, providing a German markets. This gives customers a of many months’ work to merge the new market for trading physical power; single clearing and settlement interface differing national market rulebooks in order complementing the existing continuous where they can easily follow the entire to better reflect the changing regulatory intraday market; creating a clear intraday transactions life cycle, from trade to pay- environment. price signal, increasing transparency and ment, in one easy-to-use system. creating new trading opportunities. August We provide a free energy market data February A new GB Half Hourly Day Ahead Auction kit for power sector startup businesses, We launch a new free iOS mobile app is launched in direct response to numerous to help promote innovation and invest- providing key daily data for day-ahead requests from Nord Pool’s UK customers, ment into the sector.