The rise of renewables and development of the smart grid is having an impact on European power trading. Intra-day power trading is on the rise in countries like Germany and the UK where signals can occur very quickly indeed and the volume and speed of information available to traders is almost overwhelming. EPEX, Nordpool and others now actively support intra-day trading across the Nordics, Germany, Switzerland, UK, and France. Just this month, EPEX Spot and ECC introduced 30-minute continuous trading of power spot contracts in the intraday markets in France, Germany and Switzerland. One impact of all os this has been the rise of automated trading.
Robots or bots are programs that act faster than humans to place trades. They have been in use in some financial markets for sometime but their emergence in commodity markets has lagged. Until now that is. Suddenly, automated trading is increasingly seen as the answer to intra-day power and gas markets. Specialist firms have sprung up to help trading firms and utilities develop and deploy bots while the API’s offered by EPEX and Nordpool have facilitated their deployment.
Trading power in 15-minute increments is quite a task. There are many factors to take into consideration including generation type, ramp up times, scheduling timeframes, capacity requirements, and much, much more. More and more data is available to analysts to help them understand the market and work with traders to develop trading strategies. But, there is a limit to what a trader can do in a short space of time and increasingly, bots are seen as an answer. Even if the bots are not allowed to actually place trades, they are still being used to determine trades.
In Europe, volatilities have moved ever closer to the time of delivery and so has the opportunity to profit. Markets are developing at speed and the focus is on intra-day trading – either continuous or via auctions. Increasingly, automation is needed to help manage speed and volume – not just in trading but across the entire supply chain and set of business processes involved in generating and consuming power and gas. The use of AI and machine learning is also on the rise in all of these areas of the business and ComTech expects to see the rapid development of new AI and machine learning technologies in the space to cope. As they say – There is a bot for that!