Analysis of future electricity prices

A feature of the electricity market is the trade with ongoing contracts, which can be used to insure a set electricity price in the future. As an example, in 2016 it is possible to trade forward contracts for each of the years 2017 to 2026.

 

This project investigated how accurate forward contracts are in terms of predicting the actual electricity prices in a given year. The project utilised data from 2005-2015, comparing the traded forward contract with the actual end of year prices.

 

The analysis showed a significant trade for the following year and the year after that, but very little trade for the subsequent years - consequently, it is not very effective at predicting the actual prices. Even during the last days of trading, it is often possible to see more than a 20% discrepancy between the traded price and the yearly result.

 

The analysis was conducted on behalf of the Danish Energy Agency.

 

Last update 09-Feb-2017

Further information:

 

Analysis of future electricity prices

 

Contact Mikael Togeby

or Nina Dupont

 

 

Helge Ørsted Pedersen

 

 

Ea Energy Analyses Frederiksholms Kanal 4, 3. th.1220 Copenhagen KDenmark Tel work+45 88 70 70 83 Fax +45 33 32 16 61

GEO: 55.675932, 12.575096