The complete guide to trading capacity obligations after the auction
Secondary trading allows capacity providers to buy and sell their capacity obligations after the initial auction. This creates a flexible market where providers can manage their positions, handle plant outages, or allow new market entrants to acquire capacity without waiting for the next auction.
All trades are logged on the EMR portal and automatically adjust monthly payments and penalty caps for both parties involved in the transaction.
Opens once capacity agreements are issued and runs until one working day before a potential stress event.
All trades are bilateral agreements between two parties - there is no central exchange or order book.
All trades must be registered on the EMR portal to be legally effective and adjust payments.
Prices are determined by bilateral negotiation - there is no published pricing mechanism.
Monthly payments and penalty caps automatically adjust based on registered trades.
Companies can acquire capacity without participating in the original auction.
Primary Use Cases:
Key Activities:
Trading Intensifies Because:
Critical Characteristics:
Common Scenarios:
Many providers wait until the delivery year to address capacity shortfalls. By then, prices are typically much higher and options are limited. Early trading in Phases 1-2 usually offers better pricing and more counterparties.
Not properly verifying the counterparty's ability to deliver can result in cascade failures. If your counterparty can't deliver, you're still liable for the original obligation plus penalties.
Failing to properly register trades on the EMR portal or maintain clear contractual terms can lead to disputes and regulatory issues.
Not understanding how penalty caps transfer with trades can result in unexpected financial exposure during stress events.
Stress events are more likely during winter months. Trading capacity away during summer at low prices only to need it back in winter at high prices is a common costly mistake.
Only parties with capacity obligations or those who can take on such obligations can participate. New entrants must meet the same qualification requirements as auction participants.
Prices are determined through bilateral negotiation. There's no central pricing mechanism, though market participants often reference auction clearing prices and current market conditions.
Monthly capacity payments automatically adjust based on registered trades. The seller's payments decrease while the buyer's payments increase proportionally.
You can trade up to your full capacity obligation, but you cannot trade more than you hold. Partial trades are common and allowed.
Penalty caps transfer with the traded capacity. The buyer assumes the penalty risk while the seller is relieved of it for the traded portion.