What a good time to heat up the sauna.
But the real time price will be very expensive, it depends how the consumer contract is written.
Bidding error sees Finnish day-ahead power price tumble
41–50 of 122 posts
Re: Bidding error sees Finnish day-ahead power price tumble
#42I understand put options and short selling, but how on earth can the price of a commodity sink below zero? How can you make a „sell“ order that is negative? Can someone explain please?
There get to be points in some commodities where providers temporarily do want to pay for people to take their product. Electric power is one where supply is not particularly elastic and does need to be disposed of when there is too much for grid stability.
This has happened a couple of times with oil pipelines as well.
Markets tend to figure these things out quickly though.
Commodities contracts that settle in the actual commodity and not in cash are actual obligations on both sides to deliver and take delivery. At some point in order to get rid of the obligation to take delivery at some point people are willing to pay to get rid of their contracts. Sometimes this happens when speculators make crazy bets during instability.
Re: Bidding error sees Finnish day-ahead power price tumble
#43Sounds like someone at NordPool didn't test their black box very well. (AFAIK the bidding resolver is a proprietary black box provided by a contractor.)
The black box Euphemia worked well they just bottomed the price.
Re: Bidding error sees Finnish day-ahead power price tumble
#44Unless you have a strong familiarity with ISO/FTR markets this article will be pretty opaque. The short version is that electricity delivery forecast is managed by a financial optimization process. Market participants (generators, line owners, and consumers) basically buy and sell their electricity in advance. Sometimes as far ahead as 2 years, all the way up to the day before (at which time the real time market take…
Without trying to fall too hard into a potential late-stage-capitalism hole, what is the advantages on trading like this? Beyond the advantages of making money on futures.
I guess the buy/sell in advance lets generators etc fund projects ahead of time (maint, expansion, etc) instead of always living hand to mouth on "real time sold" and without having to land "huge multi-year contracts", so the market can be a bit more fluidly priced? (Maybe too fluidly in this case!)
Re: Bidding error sees Finnish day-ahead power price tumble
#45It's only -€0.2/kWh, not that bad at all. I've been seeing spot price predicted to be -A$1/kWh in several states in Australia (which is the lowest possible bid allowed by regulation). Even in Europe, I recall seeing some post desperately trying to figure out how to curtail their solar export because the price was reaching -€0.34/kWh. Not sure an error of -€0.2/kWh is anything newsworthy TBH.
Depends what the market rate was at the time and how the exchange handled the error.
People unfamiliar with markets are often surprised how often there are serious issues. It’s not uncommon for trades from a specific time period to be invalidated.
Re: Bidding error sees Finnish day-ahead power price tumble
#46I understand put options and short selling, but how on earth can the price of a commodity sink below zero? How can you make a „sell“ order that is negative? Can someone explain please?
Happens frequently in CAISO midday during shoulder months ( https://www.caiso.com/PriceMap/Pages/default.aspx ). Renewable generation produces a lot (sunny, decent wind) and electricity usage is so low, that supply exceeds demand. Electricity has to go somewhere to keep the grid balanced, so the utilities will wholesale electricity at negative rates.
Isn't it very easy to "dump" electricity? Why even sell it?
Re: Bidding error sees Finnish day-ahead power price tumble
#47Earlier quoted context omitted.
So why don't they put that towards their own capital in terms of expanding retention capacity?
The traders have no place to store it. No method to retain, unless you pay rent, which puts pressure on your trade.
So why are they bitching about this or is it simply like a niche interest piece? Like why should anybody care about this?
Re: Bidding error sees Finnish day-ahead power price tumble
#48I understand put options and short selling, but how on earth can the price of a commodity sink below zero? How can you make a „sell“ order that is negative? Can someone explain please?
how it was explained to me:
its like if you booked a prostitute to come over on Friday, on Friday you found out your partner was coming over and you need the full service sex worker to go somewhere else but have nowhere to send them, so you attempt to pay anyone to take the booking and everyone else is in the same predicament and eventually someone’s going to take the loss of having the prostitute around their partner and mess up their social situation but will be paid handsomely for it
relatable commodities problem
Re: Bidding error sees Finnish day-ahead power price tumble
#49This is a very terse note. Is there simply not more information available than "some price went negative on the market because someone made a mistake", or am I missing something that's implied here?
Well, electricity consumption in Finland will very likely spike tomorrow. People with a certain type of contract for their electricity will actually earn money for using a lot of electricity. Don't know what the implications for the network are, but I don't think such unnatural spikes in consumption are good for it.
No, you still have to pay for transfer.
Re: Bidding error sees Finnish day-ahead power price tumble
#50Very strange that no one noticed this error as it was ~60% of Finlands average daily electricity consumption
All trades are solved at the same time for the next 24h day in a single algorithm run for all Europe at 12h and taking about 15min to solve. You notice at the end and if it converge they won't re-run it for you, it's done.