RELATION BETWEEN SHORT-TERM AND LONG-TERM CONTRACTS ON THE ELECTRICITY MARKETS IN EUROPE

Abstract

Usually, long-term prices on the power exchanges are on
average higher compared to the short-term ones. It is possible to
exploit this pattern when developing power market related trading
strategies. Furthermore, if there is a way to establish situations in
which premiums of forward and futures prices over spots are higher
than usual, some revenue increasing possibilities for the market
players are available. These issues are analyzed in this article on the
example of Czech & Slovak, German and Nordic electricity markets.
Specific recommendations are also provided to the parties who trade
on the electricity exchanges.