Comment|The electricity exchanges were mixed up again on Wednesday, and that’s why Thursday’s hourly prices were only announced in Finland in the evening. Should the ongoing problems of electricity trade be taken more seriously than at present?
Simple, effective, safe. With these words, the electricity exchange Nordpool advertises itself on its homepage. In the past year, however, the operation of the electricity exchanges has at times seemed anything but efficient and safe.
A more descriptive word would be chaotic.
Last Wednesday, the electricity exchanges had big problems again. Around midday, it became apparent that the Epex exchange could not deliver the offer information left by its customers to the next day’s spot price calculation system.
Along with Nordpool, Epex is another electricity exchange operating in several European countries.
Usually Nordpool, Epex and smaller exchanges deliver their customers’ next-day electricity purchase and sale offers by midday. An algorithm called Euphemia then calculates the hourly prices, also taking into account the transmission connections in use between the price ranges.
The details of Wednesday’s events are complicated, but what matters is where the situation led. Nordpool had to calculate European electricity prices without Epex’s offer data.
The exceptional calculation was completed only at seven in the evening Finnish time, when normally the next day’s hourly prices are published before 2 p.m.
Epex again calculated Central European prices only with their own offer information. When Nordpool’s system also had offers for the German market, for example, the end result was that there were two different prices in Germany on Thursday’s electricity market!
My head hurts when I even think about what kind of mess there was in the post-examination of the market in Germany.
Director of the Energy Agency Antti Paananen according to this, nothing similar has ever happened during the time when the whole of Europe has been involved in the common electricity market.
“The processes will certainly now be thoroughly reviewed and we will see if something should be changed to ensure that this does not happen again.”
Wednesday’s the mess was by no means the only problematic situation in the electricity market in the past year.
Last November, a large incorrect offer from Nordpool pushed the Finnish electricity market to the brink of crisis. Kinect Energy, operating in Norway, accidentally offered electricity to the Finnish market for a whole day with a power of almost 6,000 megawatts.
The company offered electricity, which it did not have. The regional price in Finland fell to the technical bottom of the market on that Friday evening, i.e. -50 cents per kilowatt hour. Without the active operation of the grid company Fingrid, Finland could have run out of electricity.
Kinect had to buy the promised electricity from the electricity producers the next day at a significantly higher price and sell it at a discount price. According to Kinect, the losses rose to almost 50 million euros.
Smaller bid errors have rocked the market even after that. According to Paananen, bid mistakes do happen every now and then and have happened every year because it’s people who make the bids. Now they have only been given exceptional attention.
But November’s giant mistake was the only one of its kind. Errors this big should not get through the stock exchange’s systems.
North pool promised after the November disaster to improve the control of bids. However, the continued confusion raises questions.
Stock trading with electricity is not just any securities trading. Electricity is a basic commodity, the pricing of which is important in the daily lives of millions of consumers and countless companies.
Disturbances in the electricity market can at worst endanger the functioning of society as a whole. They should therefore be treated very seriously.