10 ms·

Bidding error sees Finnish day-ahead power price tumble

96 points by anttiai 3y ago

sigurdjs 3y ago
Very strange that no one noticed this error as it was ~60% of Finlands average daily electricity consumption
- rsynnott 3y ago
  … Wait, how do you think modern markets _work_? Hint: it is not an elderly man writing numbers on a ledger with a quill pen. There is not generally a human in the loop.
  - sigurdjs 3y ago
    Other regulated commodity markets have what is called a «reasonability limit» avoid this exact kind of scenario. It is very concerning that the exchange didnt have any automated alerts that could trigger for example a phone call to verify that the order is correct.
    - euroderf 3y ago
      Nor a suitable test suite to catch this kind of thing preëmptively.
    - IndrekR 3y ago
      The limits are there. -500€/MWh and 4000€/MWh. It did hit the lower limit for 10 hours in the row from 14:00 till midnight. Before 14:00 they were not the last bidder, so prices are higher there. Price on the market for everyone is set by the last bidder who fits in the predicted consumption pool.
      - XelNika 3y ago
        They have price limits, but I think GP means volume alert limits. Someone unexpectedly bids a third of the Finnish production capacity, you call them and ask if they are sure.
- doikor 3y ago
  Many probably did. But as a buyer/reseller it would be in their best interest to just buy and shut up.
- hokkos 3y ago
  All trades are solved at the same time for the next 24h day in a single algorithm run for all Europe at 12h and taking about 15min to solve. You notice at the end and if it converge they won't re-run it for you, it's done.
api 3y ago
Quick! Train Llama 3!
ttkari 3y ago
What a good time to heat up the sauna.
- hokkos 3y ago
  But the real time price will be very expensive, it depends how the consumer contract is written.
  - ttkari 3y ago
    Most Finnish households have a contract which limits the effect of this pricing anomaly (fixed price contracts are quite popular as people see the hourly market rate as risky and unpredictable). However, I do have a hourly market rate based contract myself and tomorrow afternoon/evening with rates of -0,50€/kWh any electricity consumption is going to lower my energy bill - even considering the energy sale commission, taxes and energy transfer fees which I will of course have to pay.
    - rvba 3y ago
      What kind of tax is calculated on a negative rate? Some flat fee?
      - ttkari 3y ago
        There are two fixed fees households pay, an energy tax of 0,02253€/kWh and a security of supply fee (0,013 euro cents per kWh). These are not affected by fluctuations in the market prices of electricity.
MauranKilom 3y ago
This is a very terse note. Is there simply not more information available than "some price went negative on the market because someone made a mistake", or am I missing something that's implied here?
- sigurdjs 3y ago
  If you charge a 100kwh Tesla in Finland tomorrow you will be paid 50 euro, which is kind of extreme
  - patall 3y ago
    They placed a bit at that price doesn't mean the market price will be that high.
    - sigurdjs 3y ago
      It is an auction and everyone pays the same price. During the afternoon tomorrow every household in Finland will be paid significantly for their power usage unless they have a fixed price agreement, which is not that common
      - ttkari 3y ago
        According to Finnish Energy Authority (energiavirasto.fi), at the end of 2022 only 13,7% of customers had a contract where pricing is tied to the hourly market rate. It is much more common to have either a fixed price contract (usually for a term of 12 or 24 months) or a contract where the pricing is set by for example monthly averages of the market price.
        sigurdjs 3y ago
        My mistake! Assumed all Nordic countries were the same
      - stevekemp 3y ago
        I'd suspect that actually fixed-price agreements are very common, and represent the overwhelming majority of contracts for residents/individuals. I know that after the war started spot-prices rose sharply and a lot of people made the jump. Some, unfortunately, locking themselves into relatively expensive prices.
euroderf 3y ago
Sounds like someone at NordPool didn't test their black box very well. (AFAIK the bidding resolver is a proprietary black box provided by a contractor.)
- hokkos 3y ago
  The black box Euphemia worked well they just bottomed the price.
yorwba 3y ago
Fingrid published two messages that sound like countermeasures to deal with the fallout: https://umm.nordpoolgroup.com/#/messages?publicationDate=all&eventDate=nextweek&companies=N01250 https://umm.nordpoolgroup.com/#/messages?publicationDate=all... > Fingrid has closed intraday trade in directions FI>SE1 and FI>SE3 to ensure system security and balancing capacities concerning the non-matching situation in the Finland bidding zone after Day-ahead trades. Update: Intraday trade in direction FI>EE closed > Fingrid is prepared to initiate Intraday purchases, if necessary, to ensure system security and balancing capacities concerning the non-matching situation in the Finland bidding zone after Day-ahead trades.
MadVikingGod 3y ago
The three remaining crypto bros in Finland will finally make money mining for Bitcoin.
keule 3y ago
I understand put options and short selling, but how on earth can the price of a commodity sink below zero? How can you make a „sell“ order that is negative? Can someone explain please?
- temp112123 3y ago
  You need to dump product you can't store. Happened to oil during early covid: https://www.nytimes.com/2020/04/20/business/oil-prices.html https://www.nytimes.com/2020/04/20/business/oil-prices.html
  - keule 3y ago
    Ah thank you. I remember now. Still weird that this can also happen (and is allowed to happen) in an energy market.
    - idiotsecant 3y ago
      This is in fact a very good feature. When power is cheap or negative it's because there is more generation than load in some segment of the grid. To fix this you can tell people to stop generating, you can tell people to start loading, or you can just drop the price and let both happen on their own. There are targetted ways this is done when the difference is so big it threatens grid stability, but its often better to let the market handle the gross imbalance on longer timescales when grid stability is not threatened. There are some things markets are very good at. This is one of them.
      - terom 3y ago
        > There are some things markets are very good at. This is one of them. Ironic in a thread about the market making up a totally imaginary generation surplus. 10-20% of Finnish retail customers are on spot market based contract, and stand to save up to something on the order of 0.40€/kWh consumed (net after taxes and fees) off their electrical bill for the reminder of the day. I suppose every market-rational consumer would have a 10kW electric space heater outside melting snow on the ground, maxing out their supply.
iaw 3y ago
Unless you have a strong familiarity with ISO/FTR markets this article will be pretty opaque. The short version is that electricity delivery forecast is managed by a financial optimization process. Market participants (generators, line owners, and consumers) basically buy and sell their electricity in advance. Sometimes as far ahead as 2 years, all the way up to the day before (at which time the real time market takes over IIRC). So in addition to the primary stakeholders you have financial participants that buy/sell electricity without having access to any apparatus for the generation/transmission/consumption. These participants sometimes have very manual processes for buying their contracts. My guess would be some poor fresh grad was under supervised and transposed the source and sink address. Instead of buying at 203.40 they sold at 203.40 by reversing the source and sink.
- bongobingo1 3y ago
  Without trying to fall too hard into a potential late-stage-capitalism hole, what is the advantages on trading like this? Beyond the advantages of making money on futures. I guess the buy/sell in advance lets generators etc fund projects ahead of time (maint, expansion, etc) instead of always living hand to mouth on "real time sold" and without having to land "huge multi-year contracts", so the market can be a bit more fluidly priced? (Maybe too fluidly in this case!)
  - vGPU 3y ago
    The idea is to buffer changes in price. Started with crops originally iirc. Say I know I need 1 ton of seed for planting. It normally costs $5,000/ton. I am concerned that the rat epidemic might cause a seed shortage. It does. 1 ton of seed next year is worth $20,000. Because I purchased the future of 1 ton of seed for $5,000, I am not affected by this. Made up numbers obviously, as I know someone is just waiting to “well akshually” me.
    - burnerburnito 3y ago
      Question: how does that rat case actually work out followed through slightly more? If enough players bought at $5k/ton and the seed shortage increases prices due to scarcity, what happens when there's only enough seeds to meet 3/4ths of demand?
upsuper 3y ago
It's only -€0.2/kWh, not that bad at all. I've been seeing spot price predicted to be -A$1/kWh in several states in Australia (which is the lowest possible bid allowed by regulation). Even in Europe, I recall seeing some post desperately trying to figure out how to curtail their solar export because the price was reaching -€0.34/kWh. Not sure an error of -€0.2/kWh is anything newsworthy TBH.
- RayVR 3y ago
  Depends what the market rate was at the time and how the exchange handled the error. People unfamiliar with markets are often surprised how often there are serious issues. It’s not uncommon for trades from a specific time period to be invalidated.
- grecy 3y ago
  > -A$1/kWh in several states in Australia (which is the lowest possible bid allowed by regulation) It's telling they regulate the price and won't allow it to go "too low", just like they halt trading on the stock exchange if things go down too much. Free market my backside - can't let those profits dip!
  - zie 3y ago
    On the stock exchanges in the USA, they do that because we didn't use to and trading bots that were mis-configured went nuts and broke the markets for a while. Now they stop trading for (15?) minutes to let everyone make sure it's real and not their trading algorithms being stupid. It's not about not letting the stocks crash to far, it's about making sure the pricing is accurate. The Federal Reserve however is a different story. :)
    - grecy 3y ago
      > It's not about not letting the stocks crash to far, it's about making sure the pricing is accurate. If that were true, they would do the same thing if it was going up "too quickly". To the surprise of nobody, they don't.
cratermoon 3y ago
How much money was or will be lost as a result of this? Is this a Knight Capital -level error?
- fulafel 3y ago
  Going by the trade value: -203.40 per MWh, 5787 MW for 24h, 203.40578724 = 28M € - so about 5% of Knight Capital $440M Of course this may not be all, as they still have to buy the electricity from somewhere that they are selling for negative price...
terom 3y ago
https://www.fingrid.fi/sahkomarkkinat/sahkojarjestelman-tila/ https://www.fingrid.fi/sahkomarkkinat/sahkojarjestelman-tila... shows a roughly +1GW (~12GW -> 13GW) rise in consumed power during the first two hours after the price hitting the negative pricing floor (-500€/MWh) at 15:00. Seems like there's some consumer elasticity there, but not enough to make the grid fall over. This is after the national grid operator planned to intervene as necessary and imposed some restrictions on trading [1], but those seem to have been lifted and the intra-day market is working (at 10× normal volumes). > Fingrid is prepared to initiate Intraday purchases, if necessary, to ensure system security and balancing capacities concerning the non-matching situation in the Finland bidding zone after Day-ahead trades. > Update 24.11.2023 12.:12 Market situation has normalized due to Intra day trading. Fingrid resumes normal operations. Fingrid asks BRP to manage their balance normally. > Fingrid has closed intraday trade in directions FI>SE1 and FI>SE3 to ensure system security and balancing capacities concerning the non-matching situation in the Finland bidding zone after Day-ahead trades. > Update: Intraday trade in direction FI>EE closed > Update 24.11.2023 12:25 Intraday trade is open to all directions [1] https://umm.nordpoolgroup.com/#/messages?publicationDate=all&eventDate=nextweek&companies=N01250 https://umm.nordpoolgroup.com/#/messages?publicationDate=all...
- Hamuko 3y ago
  >Seems like there's some consumer elasticity there, but not enough to make the grid fall over. This has been widely reported as a market error, so many consumers might understand that the cheap electricity is not because there's a massive amount of electricity up for grabs but rather because some Norwegian company fucked up. Perhaps if this was a real situation where there is actually a huge energy surplus that more consumers would actually "waste" electricity.
- fulafel 3y ago
  As a nuance, the grid falling over would not yet result from too much demand, absent other snafus. Rather you have rolling blackouts when loads get disconnected by the grid operator, or if there are failures in implementing those in a orderly way, less orderly blackouts for parts of the grid. These kinds of managed blackouts are common in some parts of the world, eg South Africa, the recent Texas situation, etc. The frequency of the system is a clear signal about the demand/load match, and if it starts to drop more below some threshold of deviation, loads get disconnected from grid branches. Of course there can be "interesting times" leading to cascading processes in the multiple interacting automatic failsafes, you can read up on post mortems of grid failures about what kinds of things can go wrong, eg https://en.wikipedia.org/wiki/Northeast_blackout_of_2003#Sequence_of_events https://en.wikipedia.org/wiki/Northeast_blackout_of_2003#Seq... .. which is why really want to preemptively do the controlled rolling blackouts instead. The grid falling over would result in a harder, more uncertain and lengthy "black start" process, since plants need power to restart. See eg https://practical.engineering/blog/2022/12/5/what-is-a-black-start-of-the-power-grid https://practical.engineering/blog/2022/12/5/what-is-a-black...

96 points by anttiai 3y ago

sigurdjs 3y ago

Very strange that no one noticed this error as it was ~60% of Finlands average daily electricity consumption

rsynnott 3y ago
… Wait, how do you think modern markets _work_? Hint: it is not an elderly man writing numbers on a ledger with a quill pen. There is not generally a human in the loop.
- sigurdjs 3y ago
  Other regulated commodity markets have what is called a «reasonability limit» avoid this exact kind of scenario. It is very concerning that the exchange didnt have any automated alerts that could trigger for example a phone call to verify that the order is correct.
  - euroderf 3y ago
    Nor a suitable test suite to catch this kind of thing preëmptively.
  - IndrekR 3y ago
    The limits are there. -500€/MWh and 4000€/MWh. It did hit the lower limit for 10 hours in the row from 14:00 till midnight. Before 14:00 they were not the last bidder, so prices are higher there. Price on the market for everyone is set by the last bidder who fits in the predicted consumption pool.
    - XelNika 3y ago
      They have price limits, but I think GP means volume alert limits. Someone unexpectedly bids a third of the Finnish production capacity, you call them and ask if they are sure.
doikor 3y ago
Many probably did. But as a buyer/reseller it would be in their best interest to just buy and shut up.
hokkos 3y ago
All trades are solved at the same time for the next 24h day in a single algorithm run for all Europe at 12h and taking about 15min to solve. You notice at the end and if it converge they won't re-run it for you, it's done.

api 3y ago

Quick! Train Llama 3!

ttkari 3y ago

What a good time to heat up the sauna.

hokkos 3y ago
But the real time price will be very expensive, it depends how the consumer contract is written.
- ttkari 3y ago
  Most Finnish households have a contract which limits the effect of this pricing anomaly (fixed price contracts are quite popular as people see the hourly market rate as risky and unpredictable). However, I do have a hourly market rate based contract myself and tomorrow afternoon/evening with rates of -0,50€/kWh any electricity consumption is going to lower my energy bill - even considering the energy sale commission, taxes and energy transfer fees which I will of course have to pay.
  - rvba 3y ago
    What kind of tax is calculated on a negative rate? Some flat fee?
    - ttkari 3y ago
      There are two fixed fees households pay, an energy tax of 0,02253€/kWh and a security of supply fee (0,013 euro cents per kWh). These are not affected by fluctuations in the market prices of electricity.

MauranKilom 3y ago

This is a very terse note. Is there simply not more information available than "some price went negative on the market because someone made a mistake", or am I missing something that's implied here?

sigurdjs 3y ago
If you charge a 100kwh Tesla in Finland tomorrow you will be paid 50 euro, which is kind of extreme
- patall 3y ago
  They placed a bit at that price doesn't mean the market price will be that high.
  - sigurdjs 3y ago
    It is an auction and everyone pays the same price. During the afternoon tomorrow every household in Finland will be paid significantly for their power usage unless they have a fixed price agreement, which is not that common
    - ttkari 3y ago
      According to Finnish Energy Authority (energiavirasto.fi), at the end of 2022 only 13,7% of customers had a contract where pricing is tied to the hourly market rate. It is much more common to have either a fixed price contract (usually for a term of 12 or 24 months) or a contract where the pricing is set by for example monthly averages of the market price.
      - sigurdjs 3y ago
        My mistake! Assumed all Nordic countries were the same
    - stevekemp 3y ago
      I'd suspect that actually fixed-price agreements are very common, and represent the overwhelming majority of contracts for residents/individuals. I know that after the war started spot-prices rose sharply and a lot of people made the jump. Some, unfortunately, locking themselves into relatively expensive prices.

euroderf 3y ago

Sounds like someone at NordPool didn't test their black box very well. (AFAIK the bidding resolver is a proprietary black box provided by a contractor.)

hokkos 3y ago
The black box Euphemia worked well they just bottomed the price.

yorwba 3y ago

Fingrid published two messages that sound like countermeasures to deal with the fallout: https://umm.nordpoolgroup.com/#/messages?publicationDate=all&eventDate=nextweek&companies=N01250 https://umm.nordpoolgroup.com/#/messages?publicationDate=all... > Fingrid has closed intraday trade in directions FI>SE1 and FI>SE3 to ensure system security and balancing capacities concerning the non-matching situation in the Finland bidding zone after Day-ahead trades. Update: Intraday trade in direction FI>EE closed > Fingrid is prepared to initiate Intraday purchases, if necessary, to ensure system security and balancing capacities concerning the non-matching situation in the Finland bidding zone after Day-ahead trades.

MadVikingGod 3y ago

The three remaining crypto bros in Finland will finally make money mining for Bitcoin.

keule 3y ago

I understand put options and short selling, but how on earth can the price of a commodity sink below zero? How can you make a „sell“ order that is negative? Can someone explain please?

temp112123 3y ago
You need to dump product you can't store. Happened to oil during early covid: https://www.nytimes.com/2020/04/20/business/oil-prices.html https://www.nytimes.com/2020/04/20/business/oil-prices.html
- keule 3y ago
  Ah thank you. I remember now. Still weird that this can also happen (and is allowed to happen) in an energy market.
  - idiotsecant 3y ago
    This is in fact a very good feature. When power is cheap or negative it's because there is more generation than load in some segment of the grid. To fix this you can tell people to stop generating, you can tell people to start loading, or you can just drop the price and let both happen on their own. There are targetted ways this is done when the difference is so big it threatens grid stability, but its often better to let the market handle the gross imbalance on longer timescales when grid stability is not threatened. There are some things markets are very good at. This is one of them.
    - terom 3y ago
      > There are some things markets are very good at. This is one of them. Ironic in a thread about the market making up a totally imaginary generation surplus. 10-20% of Finnish retail customers are on spot market based contract, and stand to save up to something on the order of 0.40€/kWh consumed (net after taxes and fees) off their electrical bill for the reminder of the day. I suppose every market-rational consumer would have a 10kW electric space heater outside melting snow on the ground, maxing out their supply.

iaw 3y ago

Unless you have a strong familiarity with ISO/FTR markets this article will be pretty opaque. The short version is that electricity delivery forecast is managed by a financial optimization process. Market participants (generators, line owners, and consumers) basically buy and sell their electricity in advance. Sometimes as far ahead as 2 years, all the way up to the day before (at which time the real time market takes over IIRC). So in addition to the primary stakeholders you have financial participants that buy/sell electricity without having access to any apparatus for the generation/transmission/consumption. These participants sometimes have very manual processes for buying their contracts. My guess would be some poor fresh grad was under supervised and transposed the source and sink address. Instead of buying at 203.40 they sold at 203.40 by reversing the source and sink.

bongobingo1 3y ago
Without trying to fall too hard into a potential late-stage-capitalism hole, what is the advantages on trading like this? Beyond the advantages of making money on futures. I guess the buy/sell in advance lets generators etc fund projects ahead of time (maint, expansion, etc) instead of always living hand to mouth on "real time sold" and without having to land "huge multi-year contracts", so the market can be a bit more fluidly priced? (Maybe too fluidly in this case!)
- vGPU 3y ago
  The idea is to buffer changes in price. Started with crops originally iirc. Say I know I need 1 ton of seed for planting. It normally costs $5,000/ton. I am concerned that the rat epidemic might cause a seed shortage. It does. 1 ton of seed next year is worth $20,000. Because I purchased the future of 1 ton of seed for $5,000, I am not affected by this. Made up numbers obviously, as I know someone is just waiting to “well akshually” me.
  - burnerburnito 3y ago
    Question: how does that rat case actually work out followed through slightly more? If enough players bought at $5k/ton and the seed shortage increases prices due to scarcity, what happens when there's only enough seeds to meet 3/4ths of demand?

upsuper 3y ago

It's only -€0.2/kWh, not that bad at all. I've been seeing spot price predicted to be -A$1/kWh in several states in Australia (which is the lowest possible bid allowed by regulation). Even in Europe, I recall seeing some post desperately trying to figure out how to curtail their solar export because the price was reaching -€0.34/kWh. Not sure an error of -€0.2/kWh is anything newsworthy TBH.

RayVR 3y ago
Depends what the market rate was at the time and how the exchange handled the error. People unfamiliar with markets are often surprised how often there are serious issues. It’s not uncommon for trades from a specific time period to be invalidated.
grecy 3y ago
> -A$1/kWh in several states in Australia (which is the lowest possible bid allowed by regulation) It's telling they regulate the price and won't allow it to go "too low", just like they halt trading on the stock exchange if things go down too much. Free market my backside - can't let those profits dip!
- zie 3y ago
  On the stock exchanges in the USA, they do that because we didn't use to and trading bots that were mis-configured went nuts and broke the markets for a while. Now they stop trading for (15?) minutes to let everyone make sure it's real and not their trading algorithms being stupid. It's not about not letting the stocks crash to far, it's about making sure the pricing is accurate. The Federal Reserve however is a different story. :)
  - grecy 3y ago
    > It's not about not letting the stocks crash to far, it's about making sure the pricing is accurate. If that were true, they would do the same thing if it was going up "too quickly". To the surprise of nobody, they don't.

cratermoon 3y ago

How much money was or will be lost as a result of this? Is this a Knight Capital -level error?

fulafel 3y ago
Going by the trade value: -203.40 per MWh, 5787 MW for 24h, 203.40578724 = 28M € - so about 5% of Knight Capital $440M Of course this may not be all, as they still have to buy the electricity from somewhere that they are selling for negative price...

terom 3y ago

https://www.fingrid.fi/sahkomarkkinat/sahkojarjestelman-tila/ https://www.fingrid.fi/sahkomarkkinat/sahkojarjestelman-tila... shows a roughly +1GW (~12GW -> 13GW) rise in consumed power during the first two hours after the price hitting the negative pricing floor (-500€/MWh) at 15:00. Seems like there's some consumer elasticity there, but not enough to make the grid fall over. This is after the national grid operator planned to intervene as necessary and imposed some restrictions on trading [1], but those seem to have been lifted and the intra-day market is working (at 10× normal volumes). > Fingrid is prepared to initiate Intraday purchases, if necessary, to ensure system security and balancing capacities concerning the non-matching situation in the Finland bidding zone after Day-ahead trades. > Update 24.11.2023 12.:12 Market situation has normalized due to Intra day trading. Fingrid resumes normal operations. Fingrid asks BRP to manage their balance normally. > Fingrid has closed intraday trade in directions FI>SE1 and FI>SE3 to ensure system security and balancing capacities concerning the non-matching situation in the Finland bidding zone after Day-ahead trades. > Update: Intraday trade in direction FI>EE closed > Update 24.11.2023 12:25 Intraday trade is open to all directions [1] https://umm.nordpoolgroup.com/#/messages?publicationDate=all&eventDate=nextweek&companies=N01250 https://umm.nordpoolgroup.com/#/messages?publicationDate=all...

Hamuko 3y ago
>Seems like there's some consumer elasticity there, but not enough to make the grid fall over. This has been widely reported as a market error, so many consumers might understand that the cheap electricity is not because there's a massive amount of electricity up for grabs but rather because some Norwegian company fucked up. Perhaps if this was a real situation where there is actually a huge energy surplus that more consumers would actually "waste" electricity.
fulafel 3y ago
As a nuance, the grid falling over would not yet result from too much demand, absent other snafus. Rather you have rolling blackouts when loads get disconnected by the grid operator, or if there are failures in implementing those in a orderly way, less orderly blackouts for parts of the grid. These kinds of managed blackouts are common in some parts of the world, eg South Africa, the recent Texas situation, etc. The frequency of the system is a clear signal about the demand/load match, and if it starts to drop more below some threshold of deviation, loads get disconnected from grid branches. Of course there can be "interesting times" leading to cascading processes in the multiple interacting automatic failsafes, you can read up on post mortems of grid failures about what kinds of things can go wrong, eg https://en.wikipedia.org/wiki/Northeast_blackout_of_2003#Sequence_of_events https://en.wikipedia.org/wiki/Northeast_blackout_of_2003#Seq... .. which is why really want to preemptively do the controlled rolling blackouts instead. The grid falling over would result in a harder, more uncertain and lengthy "black start" process, since plants need power to restart. See eg https://practical.engineering/blog/2022/12/5/what-is-a-black-start-of-the-power-grid https://practical.engineering/blog/2022/12/5/what-is-a-black...