Energy trading and its relevance for European energy companies

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In the course of European energy market liberalization, some energy companies have founded trading units to control and manage their market risks and generate additional revenues. The book investigates what role the energy trading activities play for the energy companies strategically. It is shown that some success factors in energy trading are held within the traditional energy company businesses, so that trading success is partly explained by the activity being embedded in the energy company. Reciprocal positive effects also exist, so that the trading activity and the traditional energy businesses exhibit synergies. It is also shown that such synergies can last once they have been attained, because energy trading exhibits scale economics and requires an elaborate corporate organizational setup, which takes time to build. The relevance of the book is that it consolidates existing qualitative explanations of trading success and supports the resulting model quantitatively based on European trading data. This leads to strategically relevant explanations of why energy trading activities can be most successful when done from within an energy company.