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Renewables
As renewable asset management and trading technologies continue to flood the market, it’s imperative that energy markets continue to provide an even playing field for all players. A recent report by energy management consultancy Neon Neue Energieökonomik, and partially funded by Trailstone, found that traders with assets participating in German secondary and tertiary balancing markets have a disproportionate advantage over those only participating in intraday electricity markets. Germany currently does not publish activation signals for balancing power in real time, and the study suggests that some market players participating in balancing markets use information from those activation signals to perform trades on the intraday electricity market.
The study evaluated 80 million transactions on the EPEX Spot intraday trading platform as well as 50 million requests for secondary and tertiary balancing energy from the beginning of 2020 to mid-2021 and found statistically significant correlations. For example, the authors found that if a call for 1000 megawatts (MW) of balancing power is issued between 11:30 - 11:45 A.M., the price for electricity on the intraday market at 11:46 A.M. increases around €34 / megawatt hour (MWh) on average.
This advantage could be remedied by publishing calls for balancing power in real time, which is standard in other European countries such as the Netherlands. This would create a more transparent market for all German renewable energy asset owners. As evidenced by the report, this small change could have a large impact and make the German power markets more equitable to support continued growth for new providers in the space.
The full study (in German) can be found here: https://neon.energy/Neon_2021_Intraday_Regelleistung.pdf