FORMS OF ELECTRICITY TRADING

Forms of Electricity Trading

The Energy Law and its associated executive acts contain the basic principles governing the operation of the domestic energy market. The Energy Law does not impose specific restrictions on the shaping of energy trading methods.

The Polish energy market is divided into three segments:

1. Contract Market: This involves agreements between two parties, energy producers and energy trading companies, as well as final customers.
2. Exchange Market: This pertains to trading on the Polish Power Exchange (Towarowa Giełda Energii S.A.), mainly on the Day-Ahead Market (Rynek Dnia Następnego or RDN). RDN trading occurs daily in two sessions at 8:00 AM and 10:30 AM. RDN operates for the day preceding the day of physical energy delivery, consisting of 24 hourly quotation lines where Exchange Members can buy and sell electric energy.
3. Balancing Market: This involves comparing transactions made between market participants with the actual demand for electric energy.

Electricity trading encompasses various forms, allowing producers, distributors, and other entities to buy and sell electric energy.

Here are some main forms of electricity trading:

1. Retail Market: Involves transactions between energy suppliers and end consumers, such as households, businesses, or institutions. Consumers can choose energy providers based on various criteria, including price, energy sources, or service packages.
2. Wholesale Market: A platform where electricity producers, distributors, and other entities trade large quantities of energy. Prices on this market are usually determined by supply and demand, as well as other market factors.
3. Futures Contracts: Parties commit to buying or selling a specific quantity of electric energy in the future at a predetermined price. This tool allows protection against market price volatility.
4. Options: Investors can buy or sell option contracts, granting the right (but not the obligation) to execute a transaction related to electric energy within a specified period at a predetermined price.
5. Auctions: A process where various participants submit bids to buy or sell energy. Auctions may be managed by government organizations, independent transmission system operators, or other institutions.
6. Electronic Platforms: With the advent of modern technologies, electronic trading platforms are emerging where participants can conduct transactions online. These platforms often offer analytical and reporting tools to help participants make informed decisions.
7. Peer-to-Peer (P2P) Trading: P2P platforms enable direct trading of electric energy between producers and consumers, bypassing traditional supplier and distributor structures. Blockchain technology often supports such initiatives, enabling transaction tracking and authorization.
8. Power Purchase Agreements (PPA): Long-term contracts between energy producers and consumers where the consumer commits to purchasing a specified quantity of electric energy at a fixed price for a defined period.
9. Emission Trading Systems (ETS): In some cases, electric energy trading is associated with emission trading systems, where companies trade greenhouse gas emission units, influencing their energy strategies.