Production & Trade

Production & Trade concentrates on the procurement of fuels, the production of (renewable) electricity and the trade in electricity, oil, gas and CO2 emission certificates, for example, with a view to providing a maximum service to its customers.

Gas storage
Auctions and International Trade

Nuon has a modern trading floor for the trading activities. Production & Trade is also taking initiatives for new electricity and gas projects, including the realisation of a large wind energy project in the North Sea and the creation of gas storage capacity.

Gas storage

In January 2007 Nuon’s first underground gas storage facility came on stream in the German town of Epe, near Enschede. This storage facility serves as a buffer, allowing the company to respond flexibly to fluctuations in the supply and demand of gas. The storage facility represents an investment of more than € 100 million. Ownership of gas storage facilities fits in with Nuon’s strategy to occupy a more independent position in the gas market.

Auctions and International Trade

The energy market operates at a cross-border level. In 1999, the market was internationalised in line with the European Commission’s efforts to encourage the member states to connect their respective grids. Five cross-border interconnections are already in place in the Netherlands, while two new interconnections are being developed with Scandinavia (NorNed) and the United Kingdom (BritNed).

Three auctions are now in operation for the delivery of power to and from other countries. These auction the import and export capacity on an annual, monthly or daily basis. Alongside the expansion of the auctions, the trading on electricity exchanges is also an indication that the energy market is maturing. In addition to a growing number of participants, the exchanges are also handling increasing trading volumes.

Electricity cannot be stored. So it is important to ensure at every time of day that the available electricity is equal to the amount consumed by customers. Within Nuon, power is produced 24 hours a day, seven days a week. Additionally, electricity and gas are traded. Continuous monitoring takes place to keep a close watch on the demand for energy, on the one hand, and Nuon’s own production and available capacity in the market, on the other. Price fluctuations in the fuel markets influence the price of electricity and gas. Nuon concludes short- and long-term contracts and responds to opportunities in the market. The external market risks inherent in trading are optimised by continuously assessing and covering these risks wherever considered necessary.

Every five minutes measurement data come in. Analysts interpret these data and determine consumer consumption with the aid of comparative models. Using the outcomes from these models, they either sell surpluses or compensate shortfalls with extra purchases: all this with a view to constantly maintaining the required balance.

Weather conditions are also closely monitored in the comparative models. In the winter months, for instance, consumption surges around five o’clock because households already switch on the lights at that time while companies still have their lighting, heating and machinery on. In the summer months, power consumption decreases.

In short, Nuon keeps watch day and night on all sorts of factors such as consumption levels, the ­market, in-house production and weather conditions. Thus ensuring it can always supply all customers with power.