Fundamental Insights in Power Futures Prices

Abstract

Transformations are prevailing phenomena in the energy market. In the 1990’s the electricity market transitioned from regulated to liberalized markets, which was initiated by the objective of the European Union to create one single European electricity market. By deregulation, ending monopolies and inefficiencies one of the desired results was to lower the prices for end-users, while giving the European Union a competitive position regarding electricity for the future. In the course of deregulation, markets for financial contracts on electricity emerged and electricity became a tradable asset. Electricity was traded on the power exchanges by the new players, who appeared in the restructured electricity market: the producers, the retailers and the end-users. The publicly q