Trading chief hails energy market wins in gas crisis but warns of difficult challenges

Demand management and flexibility will be important in the years ahead but energy markets are key, says Mark Copley, chief executive of the European Federation of Energy Traders (EFET).

In an exclusive interview at Energy Trading Central and South Eastern Europe (ETCSEE) 2022, Copley, who also consults as director at Copley Energy Consulting, said that while energy has never been more political, the markets have performed “extremely well” during the energy crisis in Europe following the Russian attack on Ukraine.

“We see real, unprecedented conditions and the market delivering – yes high prices, but in contributing to security of supply, to more competition and integrating renewables,” he says, pointing to this as one of the lessons learned from the crisis.

He praises the system synchronization with Ukraine as the ability “to do really big things fast” and highlights how it was delivered with a coordinated European approach that will be needed again going forward.

Turning to the “extremely difficult” challenges ahead, Copley says there is an increasing realisation to think about demand management.

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“We know we need to use less: we need to think about which industries we perhaps don't allow to use energy first, which is a really difficult decision.”

Coupled with this is global competition for gas, which Copley says must be done without creating development problems elsewhere, and the need for diversification of supplies.

He adds that there is a need to improve the power flows in Europe, for example from west to east as opposed to east to west, and stresses the importance of cross-border capacity.

“The more cross-border capacity you've got, the better your market works”, he says likening the flows to motorways.

“If your motorway has two lanes closed, there's a big traffic jam. If your motorway has three lanes and everybody's driving at the same speed, it works. And that's where we are in Europe today and we need to make sure that cross-border capacity is used better.”

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Flexibility is another vital issue, but Copley says it is important to be aware of the scales it would address, whether hourly, weekly or seasonally, while system operators also to be clear about what they need to manage systems with very high penetrations of renewables.

“With clear definitions of system needs, clear price signals and lots of cross-border capacity, we will see investments in flexible technologies.”

Copley also states that also there should be recognition of the value of innovation in helping to manage market price signals.

“I have confidence that we will see a wave of innovation coming from these [current high] prices – which isn't to say high prices are good, I hasten to add.”

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