Recently the Ukrainian Energy Exchange has introduced flexible instruments for trading in electricity: block offers and coefficient trading. Already now, companies accredited in the direction of "Electricity" can use these tools, both separately and in complex (within one auction).
Bidders in the commercial section can sell or buy electricity not only according to standard schedules such as peak, offpeak, or base, but also by choosing an individual time period - hours of electricity sale or purchase.
When forming a position, the initiator marks the hours (one or more), corresponding output period (selection) and days. Thanks to block positions, the participant can buy or sell a volume of electricity that may otherwise be unclaimed due to the mismatch between the hours for which there is demand and those of the standard schedule.
Also thanks to the block positions the participants will be able to optimize the long-term plan of electricity output / withdrawal. As the standard products cannot be 100% in line with the long-term plan, there is a shortage / excess of electricity in certain periods. Prior to the introduction of block products at UEEX, these excess volumes would be sold on the short term market. But here the "price principle" would work and the proceeds would not be enough to buy this deficit, as the forward price for the customer is already fixed (the rule of the electricity market - when closer to the moment of delivery, the price is higher). Now it is possible to buy or sell this hours at BCM by carrying out optimization by block orders.
Another UEEX innovation is the introduction of trading coefficients. This type of auctions is also available to the participants of the commercial section. When introducing a position at an auction, the initiator independently determines to which formula for calculating the price is linked. The starting coefficient is determined by the size of the discount rate / bonus to the price for 1 MWh, which is the starting point for trading in coefficients for a certain position. For example, placing a sell position with a 3% discount equal to 0.97, and with a 3% bonus equal to coefficient 1.03 of the selected base price indicator. Auctions are held both to increase and to decrease the coefficient. This technology hedges the seller and the buyer from the risks of price fluctuations in the market.
To get acquainted with the advantages of using block positions, Inna Shcherbyna, Member of the UEEX Stock Exchange Committee, presented a new video, which can be found here, and about the trading in trading coefficients you can see the video here. We would also like to remind you that earlier UEEX CEO Oleksandr Kovalenko in his interview to Expro Gas Oil already told about the possibility and peculiarities of applying block orders and trading in coefficients.
The Ukrainian Energy Exchange constantly strives to provide convenient conditions for participants, so it constantly offers new opportunities for holding auctions. In order to get access to the auctions for buying and selling electricity on UEEX, companies need to pass the accreditation procedure.