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Energy retailing is, AFAICS, a very low fixed cost business. You don't need to own any expensive infrastructure. You just buy electricity from the wholesale mar
by jabl 5y ago
Energy retailing is, AFAICS, a very low fixed cost business. You don't need to own any expensive infrastructure. You just buy electricity from the wholesale market (usually time-varying, although careful operators can of course hedge their positions), and sell at fixed price to consumers. You essentially need a web site and a bunch of annoying telemarketers.
It seems what has happened is that many of these retailers are some small fly-by-night operations. When wholesale prices are low, they make a lot of hay (making sure to store that somewhere that regulators can't get their hands on them), when the wholesale price rises, well, declare bankruptcy, and start a new company doing the same. Rinse and repeat.
Regulators should really step up the game, making sure that retailers are properly hedged etc. Or then forget this idea of "deregulated" electricity markets.
- ToJans 5y agoThe org I mentioned in my previous post was not a reseller but an energy producer; they were the largest producers of energy both in our country and the neighboring countries. The calculations for plant scheduling took a gazillion of parameters into account (CO2 emission rights, pricings of different kinds of fuel, weather predictions, ...) These markets not only trade energy, but also fuel, logistics, CO2 emissions, ... (using direct quantities, options, leveraged products, things like insurance, ... If you could imagine it, there was probably someone trading it.) If you are into this stuff: I built the prototype that validated their portfolio position with the other suppliers; it was a protocol called EPM (Electronic position matching), developed by the EFET (European Federation of Energy Traders). I am not sure how it evolved, as this was the first iteration of the protocol...