Hydro becomes Nord Pool market maker
Norsk Hydro has become an official market maker at the Oslo-based Nordic Power Exchange (Nord Pool) - the world's first international commodity exchange for electrical power. As a market maker, Hydro quotes prices on all future power products and most liquid forward products throughout the trading day.
Hydro started the task on March 1 and will serve a one-month trial period. It is Hydro's first time in a formal market making role at Nord Pool.
"As a market maker, it's imperative we monitor the market as closely as possible," says Hydro vice president of electricity trading and portfolio management Petter Longva. "It makes us a better trader and portfolio manager, not only for ourselves but for our customers."
Market makers guarantee the placement of certain volumes of power in the marketplace within a maximum "spread" (the difference between the bid price and the offer price). Their role is essential to creating a liquid and transparent market.
Other market markers at Nord Pool are Swedish power giant Vattenfall; Bergen, Norway based power company BKK; Arendal, Norway based Agder Energi; and Oslo-based Hafslund.
Nord Pool traded a total of 1,021.8 terawatt hours (TWh) of power - both spot market and financials - at a total value of NOK 178.4 billion (USD 20 billion) in 2001. Nord Pool clearing services cleared a total 1747.6 TWh of power last year at a total value of NOK 234 billion (USD 26 billion). Nord Pool has experienced huge growth during the past couple of years.
"It is the only electricity exchange in the world with this volume of liquidity," Longva says.