TenneT is supporting the further development of the Energy Trading Platform Amsterdam (ETPA), acquiring a 40 percent stake in the platform as of 1 April 2016. The new Dutch company will provide participants with easy access to the electricity market via an independent, automated energy trading platform. Unlike existing major energy and electricity exchanges, ETPA will also provide market access to parties with a relatively small consumption or delivery capacity starting at approx. 0.5 MW. Parties wishing to conduct trade via ETPA – either directly or via a third party – may include horticultural businesses, waste processing companies, paper producers, chemical companies, and energy producers. However, the trading platform may also offer attractive opportunities to organizations such as water boards. ETPA offers its services to all energy-intensive companies and organizations based in the Netherlands.
Opportunities for all energy-intensive companies and organizations
In the past, many parties have found it difficult or impossible to become active on the electricity trading market due to high entry costs, strict requirements applicable to the volumes to be supplied, or the lack of opportunities to conclude short-term intraday contracts. ETPA enables parties to conduct energy trading in blocks of 15 minutes, one hour, one day, one weekend, or one week. ‘ETPA is a prime example of how we can capitalize on the sweeping changes in the energy market, and offers a welcome addition to the activities of large electricity exchanges that clearly serve other market segments’, says TenneT COO Ben Voorhorst. ‘Electricity generation from renewable sources like wind and solar energy is set to increase dramatically over the next five to ten years in the Netherlands. This means that weather-dependent and therefore volatile electricity production will account for a growing share of the electricity supply. In order to maintain the balance between supply and demand on the electricity grid in an efficient and cost-effective manner, we need more parties than just the major energy companies to enter the market.’
Providing access to flexible capacity
Voorhorst is referring to operators of local production units, which currently account for approx. 40 percent of total electricity production in the Netherlands. Most of these units are small-scale combined-heat-and-power (CHP) plants. These gas-fired production units can be flexibly deployed, but have not yet been provided with sufficient market access. In addition, more dynamic electricity consumption patterns based on prices (e.g. the ‘Power to Heat’ model) will provide further flexibility in the future. These are the main reasons why TenneT has decided to invest in ETPA. ‘The short-term market can and should be made much more transparent and accessible’, says ETPA Operations Director Sander Dijkman. ‘We will address accessibility issues by offering an alternative to the relatively expensive clearing process, working together with a new payment service provider. ETPA can play a key facilitating role in the energy transition by creating market prices, bringing suppliers and customers together, and taking care of the settlement of physical energy deliveries.’ ETPA Commercial Director Pol van der Linde added: ‘By joining forces TenneT and ETPA will enable horticultural businesses, paper producers and other parties to start to play an active role in accommodating fluctuations in electricity production as a result of renewable electricity generation. The energy transition – the gradual phasing out of conventional power plants in favour of renewable electricity generation – requires a trading platform capable of efficiently providing access to existing flexible capacity, as well as new initiatives such as energy storage using large batteries.’
Possible future expansion
Although ETPA will start by providing a trading platform for electricity, the company may in future also consider other products like gas, heat and Guarantees of Origin. However, the short-term focus is on further lowering the thresholds for market entry. In addition, ETPA and TenneT will jointly assess which new products can be brought onto the market to support the energy transition. TenneT plans to increase its shareholding in ETPA in the medium to long term. TenneT’s investment in ETPA is part of the company’s so-called “non-regulated activities”, and is aimed at enhancing the efficiency and transparency of the electricity market, and thus facilitating the market as effectively as possible.