Electronic OTC Trading in the German Wholesale Electricity Market

  • Stefan Strecker
  • Christof Weinhardt
Conference paper
Part of the Lecture Notes in Computer Science book series (LNCS, volume 1875)

Abstract

Recent changes in the German energy policy initiated a deregulation process from a monopolistic to a competitive market, fundamentally changing the market structure, transaction relationships and trading processes. While the mutual exchange of electric energy has been a business activity between vertically integrated utilities for a long time, wholesale electricity trading in an open market only recently started to gain momentum. Electricity becomes a commodity traded at power exchanges and off-exchange on over the counter (OTC) markets. In Germany, the wholesale electricity market is dominated by OTC trading. Trading in OTC markets is usually performed via telephone and facsimile which leads to a limited price transparency, a limited liquidity, an ex ante restricted number of potential market partners and, last but not least, substantial transaction costs. Market participants are therefore searching for new trading mechanisms to circumvent the problems of the current trading processes. The electronization of trading activities promises to reduce the disadvantages of current OTC trading processes through the automation of tasks within the transaction chain. In this context, electronic markets for electricity trading are coordination mechanisms for the market exchange of electricity and electricity derivatives, i. e., a virtual market place where supply and demand meet and trade. An important feature of electronic markets is an automated dynamic pricing which is currently not supported by electronic markets available for electricity trading in the German wholesale market. A concept for an Electronic Electricity Trading System is therefore proposed with a main focus on automated price discovery.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. [1]
    Meller, E.: Chancen und Risiken der Liberalisierung im Strommarkt. Brennsto Kraft Wärme 7/8 (1998)Google Scholar
  2. [2]
    Schmidtchen, D., Bier, C.: Liberalisierte Strommärkte. Mohr Siebeck, Tübingen (1997)Google Scholar
  3. [3]
    Pfa_enberger, W., Münch, D., Salge, K.: Liberalisierung des Strommarktes in Deutschland. In et. al., H., ed.: Liberalisierung des Energiemarktes. Volume 8 of Schriften des Forschungszentrums Jülich, Reihe Energietechnik / Energy Technology., Jülich, Forschungszentrums Jülich, Zentralbibliothek (1999) 113–147Google Scholar
  4. [4]
    Bundesministerium für Wirtschaft und Technologie: Energie Daten 1999. On-line at http://www.bmwi.de, Bonn (1999)
  5. [5]
    Finsterbusch, S.: Die Liberalisierung des Strommarktes nimmt Gestalt an. Frankfurter Allgemeine Zeitung(1999)Google Scholar
  6. [6]
    Preu\er, P.:Stromverkauf an Gro\kunden. In Weizäcker, C., ed.: Energiehandel und Energiemärkte. Volume 30 of Tagungsberichte des Energiewirtschaftlichen Instituts., München, Energiewirtschaftliches Instituts an der Universität Köln, Oldenbourg (1998) 219–241Google Scholar
  7. [7]
    Drasdo, P., Drillisch, J., Hensing, I., Kreuzberg, P., Nolden, A., Perner, J., Riechmann, C., Schulz, W., Schuppe, T., Starrmann, F., eds.: Konzentration und Wettbewerb in der deutschen Energiewirtschaft. Volume 52 of Schriften des Energiewirtschaftlichen Instituts an der Universität Köln. Oldenbourg, München et. al. (1998)Google Scholar
  8. [8]
    Gomber, P., Budimir, M., Kosciankowski, K., Urtheil, R.: Elektronisierung des au\erbörslichen Rentenhandels auf Basis von Softwareagenten. In Weinhardt, C., Meyer zu Selhausen, H., Morlock, M., eds.: Informationssysteme in der Finanzwirtschaft. Springer, Heidelberg (1998) 253–267Google Scholar
  9. [9]
    Frost, J.C.: The Software Acquisition Process. Power Marketers Online Magazine (1999) On-line at http://www.powermarketers.com.
  10. [10]
    Schmid, B., Lindemann, M.A.: Elements of a Reference Model for Electronic Markets. In Sprague, E., ed.: Proceedings of the 31st Haiwaii International Conference on Systems Sciences (HICSS’98). Number 4 (1998) 193–201Google Scholar
  11. [11]
    Picot, A., Bortenlänger, C., Röhrl, H.: The Automation of Capital Markets. Journal of Computer-Mediated Commerce 1 (1995) On-line at http://www.ascusc.org/jcmc/vol1/issue3/picot.html.
  12. [12]
    Schmid, B.: Elektronische Märkte-Merkmale, Organisation und Potentiale. In Hermanns, A., Sauter, M., eds.: Managementhandbuch Electronic Commerce: Grundlagen, Strategien, Praxisbeispiele. Vahlen, München (1999)Google Scholar
  13. [13]
    Schmid, B.: Elektronische Märkte. Wirtschaftsinformatik 35 (1993) 465–480Google Scholar
  14. [14]
    Gerke, W.: Computerbörse für den Finanzplatz Deutschland. Die Betriebswirtschaft 53 (1993) 725–748Google Scholar
  15. [15]
    Picot, A., Bortenlänger, C., Röhrl, H.: Börsen imWandel. Fritz Knapp, Frankfurt am Main (1996)Google Scholar
  16. [16]
    Weinhardt, C., Gomber, P.: Agent-Mediated Off-Exchange Trading. In Sprague, E., ed.: Proceedings of the 32nd Hawaii International Conference on Systems Sciences (HICSS’99). Number 5 (1999)Google Scholar
  17. [17]
    Domowitz, I.: Automating the Price Discovery Process: Some International Comparisons and Regulatory Implications. Journal of Financial Services Research (1992) 305–326Google Scholar
  18. [18]
    Schenk, N.: Informationstechnologie und Börsensysteme. Gabler, Wiesbaden (1997)Google Scholar
  19. [19]
    Gomber, P.: Elektronische Handelssysteme. Physica, Heidelberg (2000)Google Scholar
  20. [20]
    Securities and Exchange Commission: Regulation of Exchanges and Alternative Trading Systems, Final Rule, Release No. 34-40760 (1999)Google Scholar
  21. [21]
    Gerke, W., Rapp, H.W.: Strukturveränderungen im internationalen Börsenwesen. Die Betriebswirtschaft 54 (1994) 5–23Google Scholar
  22. [22]
    McAfee, R.P., McMillan, J.: Auctions and Bidding. Journal of Economic Literature 25 (1987) 699–738Google Scholar
  23. [23]
    Zimmerman, R., Thomas, R.J., Gan, D., Murillo-Sachnez, C.: A web-based platform for experimental investigation of electric power auctions. Decision Support Systems 24 (1999) 193–205CrossRefGoogle Scholar
  24. [24]
    Branco, F.: The design of multidimensional auctions. RAND Journal of Economics 28(1997) 63–81CrossRefGoogle Scholar
  25. [25]
    Beam, C., Segev, A.: Automated negotiations: a survey of the state of the art. Wirtschaftsinformatik 39 (1997) 263–268Google Scholar
  26. [26]
    Sandholm, T.: Automated Negotiation. Communications of the ACM42 (1999) 85–85CrossRefGoogle Scholar
  27. [27]
    Maifeld, T., Sheblé, G.B.: Computer Simulation of an Electric Marketplace Using Artificial Adaptive Agents. In: Proceedings of the 1995 Midwest Electro-Technology Conference. Number 4 (1995) 68–71Google Scholar
  28. [28]
    O’Hara, M.: Market Microstructure Theory. Blackwell Publisher, Cambridge, Mass. (1997)Google Scholar
  29. [29]
    Braue, C., Hille, L.: XETRA-Elektronisches Handelssystem am Finanplatz Deutschland. Die Bank (1997) 140–145Google Scholar
  30. [30]
    Budimir, M., Gomber, P.: Dynamische Marktmodelle im elektronischen Wertpapierhandel. Wirtschaftsinformatik 41 (1999) 218–225Google Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2000

Authors and Affiliations

  • Stefan Strecker
    • 1
  • Christof Weinhardt
    • 1
  1. 1.Information SystemsUniversity of GiessenGiessenGermany

Personalised recommendations