What FM is to some people, Verbund is to me. For me, the dividend is less interesting than the chart, but to each his own, both have a right to exist.🤷♂️
What the two companies have in common is basically wind and renewable energies in general. A little background information on electricity trading should be of interest to investors in both companies.
For the tl:dr group, the last paragraph is also sufficient - this may have an impact on the dividends!
What does energy procurement on the futures and spot market actually look like?😲🤑
Electricity exchanges work like a stock exchange, i.e. electricity is offered by producers and demanded by consumers (suppliers, companies).
The exchange price for the electricity is determined by the last power plant whose bid is used to meet demand. This so-called marginal power plant is always the most expensive. The model is called merit order and this "last price" is also called the market clearing price, as supply and demand are balanced at this price, i.e. the market is cleared.
The merit order principle is a key concept in the electricity market. It states that electricity generators must pay a price based on their variable costs enter the market in ascending order. The cheapest generators, usually renewables such as wind and solar, are switched on first as they have lower operating costs. If demand increases, more expensive generators such as gas-fired power plants or coal-fired power plants are brought in.
In practice, this means that the most expensive electricity producer determines the unit price. This means that buyers on the exchange cannot benefit from cheaper renewable energies. They always pay the price of the most expensive power plant.
For renewable electricity producers such as $UKW (+0,3%) and $VER (-2,8%) themselves, however, this is an advantage because their revenue is usually higher than their production costs, which in the best case can fuel further investments or even mean "excess profits". These are not used for investments, but are distributed as bonuses or dividends. distributed as bonuses or dividends and thus withdrawn from the market.💰💰💰
The EU Commission wants to reform the reform the European electricity marketbut the merit order principle is not up for discussion. Instead - according to the proposal - there should be a so-called bilateral contract for difference (CfD) should be introduced. This caps the prices for renewable electricity producers both downwards (EEG feed-in tariff) and upwards. In this way, the excess profits from electricity trading are to be passed on to customers... investors will not necessarily be happy.
PS: The picture is from the most beautiful 😀 pumped storage power plant of Verbund AG - especially for @Altior_mons 🚀
