"High client demand" was behind Leipzig-based power exchange EEX's decision to launch battery-focused Top-to-Bottom (TBx) futures, EEX chief executive Tobias Paulun told Argus today on the sidelines of a press briefing.
These new products, which will go live on 21 September, will allow participants to hedge the difference between the highest and lowest-priced hours within a day. This provides a certain degree of optionality and a hedge for battery energy storage systems (Bess) providers and utilities, Paulun said.
The clearing house is launching a two-hour TB2 version across a handful of markets, including Germany, France, Italy and the UK, as well as a four-hour TB4 version in Italy and Spain. If the launch is "successful", EEX will extend to other markets, Paulun added.
EEX senior business developer Viviana Ciancibello told Argus that the exchange is not planning on extending to a six-hour TB6 version because it would be too similar to the peak profile and would break up liquidity. She added that a four-hour product could be a suitable enough hedge for a six-hour battery.
European Bess capacity is expected to exceed 150GWh this year, according to lobby group SolarPower. And the group forecasts that capacity could grow by 42pc/yr in 2027-30 to 582GWh, based on its 'medium' scenario, and to as much as 735GWh under the 'optimal' scenario.
BNP Paribas' head of exotic gas and power trading, Yiwen Wu, said batteries are strategic assets for Europe. "Everyone is hearing about gas storage, but I would say batteries are equally important and will be more important in the future for the security of energy supply and for grid stabilisation," he said.
The combination of inflated gas prices, prolonged heatwaves and droughts stressed Europe's power system this summer, Centrica Energy flexibility portfolio manager Jeroen Gillis said. "That's created a lot of additional spreads on these short-term power markets. With batteries, that translates into higher revenues as this flexibility is more valuable," he added.
Paulun said the exchange also constantly discusses the addition of weather derivatives with market participants, as renewables play a growing role in energy systems and the impact of weather patterns increases.
"So far, the consensus has been that ultimately the impact of weather patterns is best reflected in the market price for electricity," he said. "If we provide more specific products, then you naturally have also a smaller client base. So that's why we haven't decided to launch [weather derivatives] so far, but that may well change in the future."
