Montel Magazine 2 2021 - Border control - Page 17

The decoupling of the two UK power exchanges “ has reduced liquidity and increased risk , to the detriment of market efficiency ”

A tale of two exchanges

A post-Brexit decoupling of UK spot prices listed on rival power trading platforms N2EX and Epex has raised concerns about market liquidity and price diversion .
By Laurence Walker
The day-ahead power prices have diverged on Britain ’ s N2EX and Parisbased Epex since the start of the year , following the UK ’ s exit from the EU . It remains unclear to what extent the N2EX-Epex decoupling – and the associated split from cross-border power trading with European exchanges – has been responsible , and whether the trend is likely to continue in the foreseeable future .
“ For various reasons , a direct comparison between pre- and post- Brexit exchange volumes is difficult ,” says Emma McKiernan , director for Nordic , Baltic , UK and Ireland at Nord Pool , the exchange which oversees the N2EX platform . She notes that until the end of last year , volumes published by Nord Pool and Epex not only showed the volumes in each auction traded among its own members , but also volumes bought and sold from the interconnected countries , as part of market coupling , as well as the volumes traded by members across the two British day-ahead auctions . “ There have also been some interconnector outages since the start of the year which have impacted market volumes overall ,” she says , adding the country saw some “ quite extreme prices ” in the day-ahead market between January and April , primarily driven by the unusually tight margins in the system .
Montel Magazine 2 – 2021
17