Euronext Nord Pool Power Futures is a renewed financial futures market designed to deliver stronger liquidity, improved transparency and more efficient hedging tools for energy companies and financial participants across Europe. With interest growing among both fundamental and financial actors, this is an ideal moment to revisit what the market offers and how it is developing.  

The initiative brings together Euronext’s position as Europe’s leading market infrastructure provider and Nord Pool’s deep expertise in both the physical and financial power market. Together, they aim to revitalise the financial power market in the Nordic and Baltic region – a cornerstone of Europe’s electricity system – while laying the foundation for future expansion. 

To understand the thinking behind the launch, we spoke with Bjørnar Elhjem Skjeie, Product & Business Development Director for Power Derivatives at Nord Pool. His experience spans trading‑desk operations, market analysis and key account management across European power and commodities markets. 

A market built on proven design and real‑world needs 

The market lists cash‑settled futures contracts based on day‑ahead prices in the Nordic and Baltic regions. These contracts allow participants across Europe to hedge future power prices and manage exposure to volatility with confidence. 

“This is a financial market operated in partnership between Euronext and Nord Pool,” Skjeie explains.  

“We list cash‑settled futures where the underlying is the day‑ahead prices in the Nordics and Baltics. The market gives customers the ability to hedge against high spot market volatility – essentially to lock in future prices on predictable volumes.” 

The product suite spans daily, weekly, monthly, quarterly and yearly contracts, extending up to ten years ahead. The design is built around system price futures and EPADs, the structure most widely used and trusted by market participants. 

“System price futures combined with EPADs give a perfect hedge in a specific bidding area,” he says.  

“The System & EPAD market design was the clear choice from market participants when we consulted them.” 

A joint European effort to rebuild liquidity 

The Nordic financial power market has existed for decades, and while liquidity has fluctuated over time, traded volumes have shown a steady and encouraging upward trend in recent years. This positive development provides a strong platform for further growth. Skjeie emphasises that this is precisely the moment to build on that momentum – and why Euronext and Nord Pool are well placed to accelerate it. 

“Liquidity has been falling, and now Euronext and Nord Pool come in as long‑standing partners committed to invest in the market and build liquidity,” he says.  

“We are investing in this market for the long term.” 

While the historical trend has presented challenges, the recent increase in volumes signals renewed engagement across the market. The partnership aims to strengthen and scale this positive trajectory, supported by long‑term investment and a modernised market structure. 

The partnership retains the preferred market design but introduces several important improvements to support liquidity, transparency and efficient trading. 

Market makers and a modern risk model – a more efficient market structure 

Two major enhancements set the new market apart: 

Market makers across the curve 

Dedicated market makers provide two‑way prices with defined spreads and minimum volumes. 

“We will have two‑way prices in all Nordic EPADs and in most of the system price curve,” Skjeie explains. “This is a crucial step to bring back liquidity, transparency and price discovery.” 

A new VAR‑based risk model from Euronext Clearing 

Developed specifically for power futures, the new model replaces older approaches used elsewhere. 

“We saw extremely high margin requirements – higher than what the actual market risk justified,” Skjeie says.  

“Our new VAR model is more robust and more efficient. Simulations show average margin reductions of 40–60%.” 

The model captures netting effects implicitly and responds more accurately to market movements, reducing costs for participants while improving risk management. 

How the contracts work 

Power futures are traded for future delivery periods and remain tradable throughout the delivery period. A cascading mechanism ensures liquidity: 

• Yearly contracts split into quarters before going into delivery 

• Quarters split into months before going into delivery 

• Monthly, weekly and daily contracts remain tradable during the delivery period 

Final settlement is based on day‑ahead prices from the physical market.  

“Since the financial contract settles against these prices, the end result is the price you locked in,” Skjeie says. 

A market for both physical and financial participants across Europe 

The market attracts a broad mix of actors: 

• Producers, suppliers and industrial consumers with physical exposure 

• Financial players such as trading firms, hedge funds and banks 

“The market is very weather‑driven and uncorrelated with other asset classes, which makes it attractive for financial participants,” Skjeie notes.  

“We also see fundamental actors returning to the market because the need for hedging has increased.” 

Access is available to direct members of Euronext Amsterdam or indirectly through member banks. 

A partnership built on complementary strengths 

The initiative leverages the capabilities of both organisations: 

• Nord Pool brings decades of experience in the physical power market, close relationships with customers and TSOs, and deep knowledge of market fundamentals. 
  
  “The physical market is the underlying for these contracts, so that knowledge is crucial,” Skjeie says. 

• Euronext contributes its strong European client base, advanced trading technology and extensive experience operating derivatives markets. 

• Euronext Clearing provides a secure counterparty and has developed the new risk model specifically for power futures. 

Nord Pool’s work with TSOs on EPAD auctions – including efforts to expand volumes and geographical coverage – further supports liquidity and complements the futures offering. 

Looking ahead – growth potential across Europe 

The initial focus is on the Nordic and Baltic markets, but the ambition is broader. 

“We start with the standard products, but we have an ambition to grow into other European markets,” Skjeie says. 

As renewable energy becomes a larger part of Europe’s power mix, new types of volatility and trading behaviour may create demand for new derivative products. Expansion of EPAD auctions – in volume, geography and cross‑border scope – is also a priority. 

System price and EPADs – the foundation of hedging 

The system price reflects the Nordic price without internal bottlenecks. EPADs pay out the difference between a bidding zone and the system price. 

“Combined, they give a perfect hedge in a specific bidding area,” Skjeie explains. 

Euronext’s Optiq matching engine enhances liquidity through implied pricing, increasing trading opportunities across combinations of contracts. 

A stronger, more transparent market for Europe 

With an innovative risk model, committed market makers, a preferred market design and the combined expertise of Euronext and Nord Pool, the futures offering aims to revitalise liquidity and strengthen the financial power market for years to come. 

“We see a lot of interest from both fundamental and financial actors,” Skjeie concludes. 

 “The market is changing, and the need for efficient hedging and transparent pricing is only increasing. We are here to build a strong, liquid and reliable market for the future.” 

by Irene Zeier
Communications Director

[email protected]