Trading the energy markets

Financial contracts are used to hedge and manage risk for power producers, industrial companies and electricity distributors. Investment managers are trading financial contracts in order to create value and profit as in any other derivatives market.

The Nordic power market traded some 1700 terrawatthours of financial power contracts in 2004, which is an increase of about 8 percent from the year earlier. Because of the high price volatility, sound risk management is necessary.