UK power market shifts towards ‘underdog’ exchange

Power market traders are increasingly opting to use the smaller of the UK’s two exchange platforms to take part in the day-ahead power auction, according to government data.

Although N2EX continues to hold double the exchange traded volume of its rival APX, the smaller of the two has been steadily gaining market share this year.

Government data shows that in January of this year exchange traded volumes were split between N2EX with 42 per cent and APX with just 6 per cent of the total volumes traded the day before delivery. The remaining 52 per cent of electricity consumed was not traded via an exchange, the data shows.

Within two months APX saw its share of the day-ahead market double to 12 per cent and continue to grow to reach 17 per cent of the market in June.

By contrast N2EX has seen its share shrink from 42 per cent to 35 per cent of consumption.

APX commercial director Derek Abernethy told Utility Week: “The overall size of the UK day-ahead auction market has remained similar, [but] APX now has a larger share and we expect this trend to continue.”

The exchange has benefitted from N2EX’s decision to pull out of intraday trading activities in March 2014, but N2EX is poised to launch a new updated platform for intraday trading later this year.

N2EX said in a statement that the new platform “is taking shape nicely” ahead of the launch set for 10 November.

Currently UK traders can use either N2EX or APX to take part in the UK day-ahead auction. Both exchanges are linked to produce the same result, which in turn is linked to other north-west European exchanges through a price coupling algorithm. This enables price coupling across the region’s day-ahead electricity markets to increase the efficient use of interconnectors.