Icegrid (Landsnet), which holds a monopoly on the transmission of electricity in Iceland, plans to establish a wholesale market for electricity by the end of this year, which will operate as a market similar to a stock market.
Preparations for the market, which has the working title ISBAS, are well underway. “Parties will make offers at a certain price and others can then accept these offers,” Martha Eiríksdóttir, director of business relations at Icegrid, explained to 24 Stundir.
“In that way we will both have price determination on the market and a platform to trade with electricity,” Eiríksdóttir continued. “Today there is no such platform; people just pick up the phone and call each other.”
“Everyone involved in this market agrees that a formal price determination and platform is necessary. For example, it’s natural that shortage and redundancy influence the price to some extent. The forces supply and demand will be influential factors,” Eiríksdóttir emphasized.
Eiríksdóttir explained that to begin with the main participants in the energy market will be the energy companies and that the market will trade with the excess energy they produce. Time will have to tell whether other kinds of trading with electricity will be possible, she said.
“We are taking the first step but of course we hope that we can take further steps in the future. Our role is to establish the market and encourage simulative operations so that people see the benefits in trading on the market and activity is created,” Eiríksdóttir concluded.
To begin with, Icegrid aims at trading with between 0.5 and 1.0 percent of the electricity produced in Iceland on the new energy market.
The project is undertaken in cooperation with the Nordic electricity market Nord Pool Spot, which has operated for more than a decade and has around 70 percent market share in the area in which it operates.