15 October 2002 – The once dominant US energy traders led by Enron have all but completed a total withdrawal from the European energy trading markets. This week TXU shut its trading activities in mainland Europe and the Nordic countries just a week after AEP took the same step.
Analysts say the role of European heavyweights like Germany’s RWE and Electricité de France in maintaining liquidity in the continent’s spot power markets is becoming crucial as the US traders that once drove those markets pull back amid a devastating credit squeeze.
“There has been a big shift away from the American traders to asset-backed Europeans,” said the trading manager at one of Germany’s top utilities. “We are seeing (Belgium’s) Electrabel and the Dutch groups, Essent and Nuon, doing more and more volume.”
US trading companies have been forced to cut costs in order to protect their balance sheets and have refocused on asset-backed activities. In addition to TXU and AEP, US-owned Duke Energy has also quit Germany and the Nordic market in recent weeks. Other US names vanishing from the European scene include Aquila Energy and Williams.
EDF Trading, the secretive trading arm of Electricité de France, is another emerging force, traders say.
Having moved its 200 staff to plush new offices in central London earlier this year, EDFT has started cranking up its trading volumes in German power.
In the UK, it has become a market maker on the web-based trading platform IntercontinentalExchange.
“EDF Trading came into the German power quite heavily a few months ago and at one stage was probably the biggest trader there,” said one banking source. “I think they scaled things back slightly since then but they’re still a force.”
Trader say the only remaining US traders with significant presence in Europe are Entergy-Koch trading and Sempra, both of which have escaped the crisis engulfing much of the U.S. power industry.