AB Power Advisors is a premier advisory services firm that specializes in delivering customized solutions to the U. With over seventy-five years of collective experience working for various market participants in a commercial, capital deployment, risk management and regulatory capacity, we are able to lean on our unique perspectives to help uncover hidden risks and capitalize on opportunities for our clients.

Our diversified experience allows us to be Your Competitive Advantage. He has over 20 years of experience in the power industry with-in depth knowledge of trading, asset optimization, regulatory advisory, business development and operations. Matthew has over 20 years of experience in the power industry with comprehensive knowledge of risk management, deal origination and structuring. Prior to that, inCaitlin was the first in-house attorney for Potomac Economics, the Independent Market Monitor for the wholesale electricity markets of ERCOT, where she worked in an advisory capacity to the Public Utility Commission of Texas on investigations into market manipulation and development of wholesale market design.

Caitlin received an L. A in Economics from the University of Texas. Downloadable Brochure.Virtual bidding is a strategy implemented in various Independent System Operator electricity markets of trading Day-Ahead prices against Real-Time or Hour-Ahead prices.

The term "bid" can be used loosely in electricity markets to refer to an offer to buy or to sell. And the term "virtual" is used to refer to the fact that, while these trades occur in a physical market, virtual trades never entail taking a physical position—because every sell or buy Day Ahead will be closed by a buy or sell in Real Time. The ISO maintains a trade execution system that ensures all virtual positions will be closed before delivery time. A virtual bidding platform gives financial entities a way to participate in these physical markets, with no physical assets or presence on the grid.

They can attempt to capitalize on regular divergences between these markets of different time period for the same underlying perhaps using time, absolute price levels, or other external variables as conditioning factors. If this strategy of trading one time period against another without the intent or perhaps even the ability to deliver or receive physical power is implemented outside of a transaction system that identifies virtual bids and ensures they will be closed, it may be referred to as "implicit" virtual bidding.

Virtual positions are included in the same simultaneous feasibility tests and price determination processes as real positions.

Thus they can serve to reduce inefficiencies in the market. Virtual bidding is a form of speculation not dissimilar to futures trading in the other commodity markets.

Virtual bidding is the buying and selling of electricity without ever physically producing or consuming it. Instead all trades are offset in a subsequent market thus preventing physical delivery.

There are a number of differences between virtual bidding and traditional commodity markets.

Houston power trader loses pricing fight against ERCOT

Prominent amongst these are that virtual bidding occurs in electricity markets that are discrete, whereas most commodity markets allow for continuous trading. In addition virtual bidding usually occurs for very short time horizons, usually between the day-ahead market and the real-time market.

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There is no reason why it should not occur in different electricity markets. For example, buying and selling monthly contracts for a common delivery point such as the California-Oregon Border COB without ever taking physical delivery is extremely similar to virtual trading, although in this latter case the product is not explicitly identified as a virtual product. Identifying virtual trades explicitly occurs in all the organized Independent System Operator -type markets and confers the benefit of not co-mingling truly physical bids with financial bids.

This clear delineation prevents the financial act of speculation from unduly affecting the reliability of the electric system. Virtual bidding is implemented for a number of reasons, not the least of which is the fact that in its absence there is a tendency for implicit virtual bidding to occur, and the presence of this practice tends to create difficulties for grid operators. There are many benefits of virtual bidding besides the fact that its presence creates an appropriate avenue for arbitrage and in essence assists reliability.

The most commonly identified benefits are as follows:.

Day in the Life: energy trader

Often generators reside in load pockets where physical competition is constrained due to insufficient transmission. Virtual bidding allows virtual traders to compete to supply power within the constrained area. For this benefit to exist the type of virtual bidding must allow bid submission at the nodal level or at the constrained area level.

Load is often large enough to influence the market outcome by varying the quantity they bid into the DA market. Virtual bidding mitigates this power by allowing other market participants to simply bid in the load that was under-scheduled.

The mitigation of supplier generators market power is commonly accepted but less well documented.

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For suppliers to exercise market power they would need to withhold generation in the Day-Ahead market DAM. This is more difficult in the presence of virtual bidding as virtual traders can submit virtual supply to compete away this withholding practice. The improvements to market efficiency emerge as the prices in the DA and RT markets tend to converge.

This makes pricing less volatile and this decrease, albeit small, is the benefit. Prices will not converge completely as there will still be stochastic differences that were not foreseen between DA and RT, but the narrowing of the price spread leads to greater predictability. The purported benefits of virtual bidding have resulted in it spreading to new ISOs over time.The Public Utility Commission voted to dismiss a complaint brought by a Houston commodity trading firm after a transmission error by the Houston merchant power Calpine sent wholesale power prices spiking last year.

ERCOT officials said the grid manager does not make price corrections when it receives incorrect information from generators. Aspire said the error caused consumers, industrial consumers, power traders and retail electric providers millions of dollars in losses by pushing up the price of electricity contracts. ERCOT said in regulatory filings last year that it should not be forced to reprice the trades because generators submit erroneous data so frequently it would have to adjust prices as often as once a day.

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Please give an overall site rating:. Privacy Statement.For example, an electric heater rated at watts operating for one hour consumes one kWh of electricity.

Turning on a watt light bulb for 20 hours uses one kWh of electricity. Electricity is a relatively new type of tradable commodity. Several characteristics differentiate it from other tangible commodities like crude oil or natural gas:. ISO forecasts and schedules generation to assure that sufficient generation and back-up power is in place to meet unexpected demand or generation loss.

It must be a non-commercial organization, neutral and independent of commercial players. Each one is responsible for the reliability, operations, resource planning and expansion in the deregulated electricity market region in North America:. This market typically consists of day-ahead and real-time markets. Electricity generators and Load Serving Entity LSE submit their generation offers and load bids in the day-ahead and real-time market.

System operators balance electricity supply and demand in each location on the bus considering the transmission constraints through an auction process:.

ercot power trading

In the real-time market, operators send dispatch instructions to each generator based on actual system operating conditions in a real-time basis. Generators get paid at generation bus LMP. Loads pay at load bus LMP. Transactions pay differential in source and sink LMP.

And revenues are paid to the resources regardless of whether energy is produced or not. CME Group offers a variety of futures and options contract for electricity day-ahead, real-time and capacity market participants in various regional locations to hedge and manage risk exposure.

CME Group is the world's leading and most diverse derivatives marketplace. Markets Home.

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Active trader. Hear from active traders about their experience adding CME Group futures and options on futures to their portfolio.

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Find a broker. Understand how the bond market moved back to its normal trading range, despite historic levels of volatility.As seen below, temperatures in the Houston area reached 98 degrees Fahrenheit and the heat index reached degrees Fahrenheit on August 12th source: NWS.

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As seen below, the load forecast dotted blue line came in lower than forecasted solid blue line between 7 am CT and pm CT, which overlaps with when prices started to spike. Not only did load come in higher than forecasted, but wind came in lower than forecasted during this same time period, which likely further worsened the problem.

When prices were high on August 12th the load forecast error was around -1, MW and the wind forecast error was around 3, MW. Load coming in higher than forecasted and wind coming in lower than forecasted were likely key contributors to the price volatility.

ercot power trading

Congestion: Increased load on August 12th resulted in congestion on the transmission system. Blue dots are price nodes associated with a Live Power monitored generator. Generators with a high positive shift have leverage over the constraint, meaning by generating they help alleviate the congestion e. Conversely, generators with a high negative shift factor exacerbate the constraint by generating e.

If you subscribe to Live Power you can see exactly how these generators respond when the constraint hits so you can be better prepared in the future when this constraint binds. Generation: Using 60 second generation data from Live Power you can see which generators ramped up to meet load and simultaneously contributed to congestion on the grid. By having access to Live Power data in Yes Energy, you can use these facilities as a leading indicator of price movement and congestion on the grid.

Key Takeaways. Sign up below for more information about the data used in this analysis and how it could benefit your workflow. Yes Energy Blog. View fullsize. Sign up to learn more about the data used in this analysis. Yes Energy Blog Older Newer. Yes Energy See More. Trade Smarter.Do you guys know what US power trading is?

It's under commodities desks, but I'm not sure what exact commodities they trade. I would not watch Enron videos, that was the golden era of power trading. Now days I think comp ranges from Using that information they can trade real-time power, or engaged in structured deals with clients who want to hedge against changes in fuel prices or power demand.

Now days that's illegal, so no more big bucks. Also, CAISO can just declare that volatile movements in power prices were a technical glitch and reset value at which trades actually occurred I am a power trader and agree Real-Time is pure prop? GS - does a lot of biz in NE Citi - does not do much on phy side. Calp, Southern, AEP, Exelon would be the biggest players in size however does not mean they are making most money or anything like that If you have gen rights or managing gen load you have that aspect as well.

The Vancouver office should help in that regards. Anyone have a stint trading power real-time? I did some real time and only working 12 days a month is pretty nice.

Try catching a movie at noon on a tuesday or tee off at 9 am on a monday. Do your year to two and move on out. I know a few guys who did here, you can get more than a week off depending on the rotation as you said. It requires a certain type of person to adapt and enjoy that lifestyle. Vancouver like San Deigo is prolly one of the nicer cities to trade energy I bet as long as you dont mind getting in at 4am that is.

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ercot power trading

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Ercot Power Trading jobs

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If you need help on the process, please message me and I'll help directly. It is of critical importance to make your voice heard. If you're an American voting from abroad, you can use fax fvap.Over the past few months, the power trading market has received quite an education in the commodity trading business.

Collectively, the industry is now considerably more astute about credit, price volatility, risk management and the critical importance of a crystal clear definition of the obligations of buyer and seller. Through this process, power trading has started to mature as an industry, and like all mature energy commodities, the market is increasingly concentrating liquidity at a select group of specific geographic locations or hubs.

This geographic concentration of liquidity serves to support several positive market developments, including enhanced price discovery, more narrow bid-ask spreads and in general, a more efficient marketplace. But while the hub development process in the power market is progressing, it is far from complete.

And as market participants in other energy commodities have learned, the decision to trade at a particular hub using a particular contractual instrument, can be as important - if not more important - than the price of the trade itself.

Virtual bidding

In fact, the power business already has some battle scars from the shifting of trading hubs and trading instruments. The western hub has a significant level of activity, but limited reliable access to high demand areas, while the east delivery point has the high-demand access, but is occasionally constrained during on-peak hours.

Liquidity dried up in both halves of PJM and took several weeks to recover. A number of traders that were caught with out-month positions at the old KV hub delivery point incurred substantial financial losses to unwind their positions.

Similar to PJM, liquidity dried up and several traders with out-month deals had to do a lot of work to protect their positions. Clearly "Hub Trading Delivery Risk" is a component of the trade that deserves a lot of attention.

What lessons can be elicited from the commoditization of crude oil, petroleum products, natural gas? Why some hubs could succeed while others fail? And finally. A good definition and description of a power hub can be found on the PJM webpage, as described below:. A hub is an aggregation of representative buses grouped by region.

Hubs create a common point for commercial energy trading. What is the business reason for Hubs? Hubs create a common point for commercial trading contracts to settle with or without going to physical delivery. Hubs are intended to create price signals for geographical regions of the control area by aggregating a group of representative buses.

The creation of hubs reduces the risk of delivering to one particular bus whose price is more volatile during a constrain than a collection of bus prices at a weighted average. Can a hub be a source or a sink?

ercot power trading

Potentially the power business could have a very large number of hubs. But, according to trade publications that track spot prices for next-day power, only about 20 points are actively traded. There are seven points in the central U. Clearly power trading volumes are concentrated at a small number of locations. But is this a negative aspect? Why is the market behaving in this manner? And what is occurring at the remaining points? For answers to these questions, we can look to the experience of other energy commodities.

For crude, petroleum products and natural gas liquids, there are only a scant number of critical market hubs, each with its own trading standards and execution tools. In natural gas liquids, market centers are located at: Mt. For crude, products and natural gas liquids, other points such as production facilities, refineries and storage terminals generally trade in an active location-arbitrage marketplace at market transportation differentials, relative to these major market center points.

This relative pricing structure is what makes hub-based trading work across an entire market.


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