Introduction

Abstract

Investment opportunities can be assigned to asset classes such as stocks and bonds. Electricity is a new asset class, which emerged in the course of deregulation of electricity markets. The deregulation process started in the United Kingdom with the establishment of the power exchange in England and Wales in 1990. In 1998 Germany followed. Two power exchanges with different business approaches were initially established and merged after two years. The merged power exchange trades real electricity supply and derivatives using an auction system. The analysis of implemented auction rules based on auction theory helps to understand price movements of electricity. This may result in an improved trading environment with lower average prices for consumers.