Energy gains

According to energy experts at Consultants Baringa, European electricity producers face margin calls totalling €1 trillion. However, they will be in a solid position to repay government-backed loans if governments help them out of their liquidity crunch. This year's rising energy price has raised margin requirements to unprecedented levels for power producers that hedge their sales in the futures market, sparking widespread calls for government intervention to prevent the European market from collapsing. Nick Tallantyre, head of global energy and commodities trading at Baringa, said governments should feel confident in providing market participants with the additional liquidity they need.

Once power was restored and the protections dissolved, most companies would have enough money to repay their government-backed loans. EU ministers asked the European Commission to devise emergency measures to help energy companies access funds. Tallantyre said the size of the margin requirements across the European gas and electricity market is challenging to estimate but likely to be around €1 trillion. The remainder is traded on exchanges that require both parties to make margin payments.The EEX in Leipzig is Europe's most liquid energy market and the main trading hub for Germany and Central Europe.

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