Electronic OTC Trading in the German Wholesale Electricity Market

  • Stefan Strecker
  • Christof Weinhardt
Conference paper

DOI: 10.1007/3-540-44463-7_24

Part of the Lecture Notes in Computer Science book series (LNCS, volume 1875)
Cite this paper as:
Strecker S., Weinhardt C. (2000) Electronic OTC Trading in the German Wholesale Electricity Market. In: Bauknecht K., Madria S.K., Pernul G. (eds) Electronic Commerce and Web Technologies. EC-Web 2000. Lecture Notes in Computer Science, vol 1875. Springer, Berlin, Heidelberg

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.

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Copyright information

© Springer-Verlag Berlin Heidelberg 2000

Authors and Affiliations

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

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