Brexit Hands Traders a Lucrative Way to Play Power Markets
- Arbitrage opportunity on U.K. power prices between exchanges
- Price difference increases inefficiency, boosts consumer costs
Photographer: Ady Kerry/Bloomberg
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Traders have found a new way to make money in the U.K. electricity market since the country left the European Union.
Since Brexit, the price of short-term U.K. power is being set on two exchanges at different times, allowing traders to exploit any deviation between the results. The price for the same contract should be the identical but the difference can be as much as 500 pounds ($697) per megawatt-hour, a seven-fold increase over the average next-day rate.