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Bidding error sees Finnish day-ahead power price tumble

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Re: Bidding error sees Finnish day-ahead power price tumble

#51

Post by IndrekR »

sigurdjs wrote: post #29
rsynnott wrote: post #23

Earlier quoted context omitted.

… Wait, how do you think modern markets _work_? Hint: it is not an elderly man writing numbers on a ledger with a quill pen. There is not generally a human in the loop.

Other regulated commodity markets have what is called a «reasonability limit» avoid this exact kind of scenario. It is very concerning that the exchange didnt have any automated alerts that could trigger for example a phone call to verify that the order is correct.

The limits are there. -500€/MWh and 4000€/MWh. It did hit the lower limit for 10 hours in the row from 14:00 till midnight. Before 14:00 they were not the last bidder, so prices are higher there. Price on the market for everyone is set by the last bidder who fits in the predicted consumption pool.

Re: Bidding error sees Finnish day-ahead power price tumble

#53

Post by ttkari »

hokkos wrote: post #41
ttkari wrote: post #4

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.

Most Finnish households have a contract which limits the effect of this pricing anomaly (fixed price contracts are quite popular as people see the hourly market rate as risky and unpredictable). However, I do have a hourly market rate based contract myself and tomorrow afternoon/evening with rates of -0,50€/kWh any electricity consumption is going to lower my energy bill - even considering the energy sale commission, taxes and energy transfer fees which I will of course have to pay.

Re: Bidding error sees Finnish day-ahead power price tumble

#54

Post by anon23 »

bongobingo1 wrote: post #44
iaw wrote: post #36

Unless 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 mo…

Because there is effectively no way to store energy at scale, prices are extremely volatile, like from $1 to $1000 in five minutes.

If you want to buy a solar panel with a useful life of 10 years there’s basically no way to estimate how much revenue it will make. But if I promise to pay you $10 for that energy all year, you have some idea if your purchase makes sense.

Re: Bidding error sees Finnish day-ahead power price tumble

#55

Post by vGPU »

bongobingo1 wrote: post #44
iaw wrote: post #36

Unless 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 mo…

The idea is to buffer changes in price. Started with crops originally iirc. Say I know I need 1 ton of seed for planting. It normally costs $5,000/ton. I am concerned that the rat epidemic might cause a seed shortage. It does. 1 ton of seed next year is worth $20,000. Because I purchased the future of 1 ton of seed for $5,000, I am not affected by this.

Made up numbers obviously, as I know someone is just waiting to “well akshually” me.

Re: Bidding error sees Finnish day-ahead power price tumble

#56

Post by grecy »

upsuper wrote: post #38

It'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.

> -A$1/kWh in several states in Australia (which is the lowest possible bid allowed by regulation)

It's telling they regulate the price and won't allow it to go "too low", just like they halt trading on the stock exchange if things go down too much.

Free market my backside - can't let those profits dip!

Re: Bidding error sees Finnish day-ahead power price tumble

#57

Post by idiotsecant »

axlee wrote: post #46
fenixnuke wrote: post #34

Earlier quoted context omitted.

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?

Is it so easy? Suppose someone told you to 'dump' 100MW right now, for 3 hours. How would you do it?

Re: Bidding error sees Finnish day-ahead power price tumble

#58

Post by idiotsecant »

keule wrote: post #35
temp112123 wrote: post #27

Earlier quoted context omitted.

You need to dump product you can't store. Happened to oil during early covid: https://www.nytimes.com/2020/04/20/business/oil-prices.html

Ah thank you. I remember now. Still weird that this can also happen (and is allowed to happen) in an energy market.

This is in fact a very good feature. When power is cheap or negative it's because there is more generation than load in some segment of the grid. To fix this you can tell people to stop generating, you can tell people to start loading, or you can just drop the price and let both happen on their own.

There are targetted ways this is done when the difference is so big it threatens grid stability, but its often better to let the market handle the gross imbalance on longer timescales when grid stability is not threatened.

There are some things markets are very good at. This is one of them.

Re: Bidding error sees Finnish day-ahead power price tumble

#59

Post by Nextgrid »

axlee wrote: post #46
fenixnuke wrote: post #34

Earlier quoted context omitted.

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?

How would you dump it at this large scale? The point of “selling” it at negative price is to encourage consumers to connect loads on the grid in order to burn this extra energy to maintain grid balance.

Re: Bidding error sees Finnish day-ahead power price tumble

#60

Post by ttkari »

usr1106 wrote: post #49
hallux wrote: post #9

Earlier quoted context omitted.

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.

My current transfer fee is 0,03€/kWh. There is also the electricity tax (0,028€/kWh) and energy sales commission (0,004€/kWh). With hourly energy rate of -0,50€/kWh any usage will lower my energy bill for the current month even considering all the above costs.
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