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Electronic OTC Trading in the German Wholesale Electricity Market

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Electronic Commerce and Web Technologies (EC-Web 2000)

Part of the book series: Lecture Notes in Computer Science ((LNCS,volume 1875))

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Abstract

Recent changes in the German energy policy initiated a deregulation process from a monopolistic to a competitive market, fundamentally changing the market structure, transaction relationships and trading processes. While the mutual exchange of electric energy has been a business activity between vertically integrated utilities for a long time, wholesale electricity trading in an open market only recently started to gain momentum. Electricity becomes a commodity traded at power exchanges and off-exchange on over the counter (OTC) markets. In Germany, the wholesale electricity market is dominated by OTC trading. Trading in OTC markets is usually performed via telephone and facsimile which leads to a limited price transparency, a limited liquidity, an ex ante restricted number of potential market partners and, last but not least, substantial transaction costs. Market participants are therefore searching for new trading mechanisms to circumvent the problems of the current trading processes. The electronization of trading activities promises to reduce the disadvantages of current OTC trading processes through the automation of tasks within the transaction chain. In this context, electronic markets for electricity trading are coordination mechanisms for the market exchange of electricity and electricity derivatives, i. e., a virtual market place where supply and demand meet and trade. An important feature of electronic markets is an automated dynamic pricing which is currently not supported by electronic markets available for electricity trading in the German wholesale market. A concept for an Electronic Electricity Trading System is therefore proposed with a main focus on automated price discovery.

The research presented in this paper is funded by the Deutsche Forschungsgemeinschaft (DFG) under project no. WE 1436/4-1. We would like to thank the four anonymous referees for their valuable suggestions and helpful comments. The authors are responsible for all remaining deficiencies.

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Authors and Affiliations

  1. Information Systems, University of Giessen, Licher Str. 70, D-35394, Giessen, Germany

    Stefan Strecker & Christof Weinhardt

Authors
  1. Stefan Strecker
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  2. Christof Weinhardt
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Editors and Affiliations

  1. IFI, University of Zürich, Winterthurer Str. 190, 8057, Zürich, Switzerland

    Kurt Bauknecht

  2. Department of Computer Science, Purdue University, West Lafayette, IN, 47907, USA

    Sanjay Kumar Madria

  3. Department of Information Systems, University of Essen, Universitätsstr. 9, 45141, Essen, Germany

    Günther Pernul

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© 2000 Springer-Verlag Berlin Heidelberg

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Strecker, S., Weinhardt, C. (2000). Electronic OTC Trading in the German Wholesale Electricity Market. In: Bauknecht, K., Madria, S.K., Pernul, G. (eds) Electronic Commerce and Web Technologies. EC-Web 2000. Lecture Notes in Computer Science, vol 1875. Springer, Berlin, Heidelberg. https://doi.org/10.1007/3-540-44463-7_24

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  • DOI: https://doi.org/10.1007/3-540-44463-7_24

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