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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

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.
- wcoenen 3y ago
  At first I thought your math was wrong, because that doesn't match the numbers in the article. But then I checked the day-ahead prices at epexspot[1], and it's indeed showing -500 euro/MWh in the afternoon, from 14h00 to midnight! [1] https://www.epexspot.com/en/market-data?market_area=FI&trading_date=2023-11-23&delivery_date=2023-11-24&underlying_year=&modality=Auction&sub_modality=DayAhead&technology=&product=60&data_mode=table&period=&production_period= https://www.epexspot.com/en/market-data?market_area=FI&tradi...
patall 3y ago
I think it's all there. The company in questions bid provides ~5800 MW for 24h, paying 203€ to those that use that power. Other companies will have accepted that bid (automatically) and will now tomorrow expect that power to be delivered (and get money for it), while other providers are planning to do something else with their power. The company mentioned may or may not have that much power available.
- sigurdjs 3y ago
  They cannot produce that amount of power and needs to buy it back on the secondary market. Will likely cost around 100Meur.
  - codetrotter 3y ago
    FTA: > "We are working with other market parties to solve this extreme situation," it said. Sounds like they are working on an agreement with the others to avoid their mistake turning out to be as costly as that. It’s probably in the interest of all of the participants that this is resolved with a less costly outcome. After all, who knows which of them will be the one making a similar mistake next time. It’ll be good for them then, if they played nicely now as that can inspire how future happenings will play out.
  - kragen 3y ago
    this is similar to how knight capital lost 440 million us dollars one afternoon in a trading bot bug and had to get merged with one of their competitors. this isn't quite that big
- deleted 3y ago
  [deleted]
7thaccount 3y ago
The market price is based off the cost of the marginal MW for some of these auctions. They tried selling power, but someone accidentally said they'd sell for a very large negative euro per MW hour amount and that set the price for the entire market and obligated them to pay the market to sell power. This is pretty rare, but not unheard of.
- YetAnotherNick 3y ago
  Can't officials just place a bid to buy power at whatever price(negative?) to even out the extra power that is not there?
  - 7thaccount 3y ago
    They prob didn't notice until the market closed. Even then, you can't just undo a bid like that unless they have some kind of emergency clause to fix mistakes like this.
  - miohtama 3y ago
    Sales are final. The seller (Norwegian Kinect Energy) will need to negotiate with other major marker participants to bail them out. But it’s likely in the interest of everyone of not to let them collapse. The markets would be in disarray if there would be undo button for a trade. Preparations need to be made by large industry participants for every daily allocation.
    - euroderf 3y ago
      It's Scando, so i would imagine that if the relevant ministers in FI SE NO all sign off, and no major market players (like Fortum) object, then they'll unwind it and fall back to replaying the previous day's bids. Or is this impossible ?
      - miohtama 3y ago
        It's impossible to undo because a lot of bids are build on the top of other bids. You would need to undo tons of history. A lot of legit players and traders would lose money. They would sue for market manipulation. Let one who makes mistakes to pay for them. However this does not prevent doing other trades on the top this trade to other direction. It is the question who catches the falling dagger and pays for the mistake of others. See a similar story here https://en.wikipedia.org/wiki/Knight_Capital_Group https://en.wikipedia.org/wiki/Knight_Capital_Group
hallux 3y ago
Well, electricity consumption in Finland will very likely spike tomorrow. People with a certain type of contract for their electricity will actually earn money for using a lot of electricity. Don't know what the implications for the network are, but I don't think such unnatural spikes in consumption are good for it.
- usr1106 3y ago
  No, you still have to pay for transfer.
  - ttkari 3y ago
    My current transfer fee is 0,03€/kWh. There is also the electricity tax (0,028€/kWh) and energy sales commission (0,004€/kWh). With hourly energy rate of -0,50€/kWh any usage will lower my energy bill for the current month even considering all the above costs.
    - usr1106 3y ago
      Ah thanks. The rule of thumb "you don't earn" applies to "ordinary" negative energy prices caused by favorable weather. Obviously here the price was so extreme that old wisdoms no longer apply. Myself I enjoy the comfort of a fixed rate contract. No efforts in trying to optimize consumption profile over days and weeks.
  - creer 3y ago
    And besides paying for transfer you also need capacity available for transfer.

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.
wcoenen 3y ago
At first I thought your math was wrong, because that doesn't match the numbers in the article. But then I checked the day-ahead prices at epexspot[1], and it's indeed showing -500 euro/MWh in the afternoon, from 14h00 to midnight! [1] https://www.epexspot.com/en/market-data?market_area=FI&trading_date=2023-11-23&delivery_date=2023-11-24&underlying_year=&modality=Auction&sub_modality=DayAhead&technology=&product=60&data_mode=table&period=&production_period= https://www.epexspot.com/en/market-data?market_area=FI&tradi...

patall 3y ago

I think it's all there. The company in questions bid provides ~5800 MW for 24h, paying 203€ to those that use that power. Other companies will have accepted that bid (automatically) and will now tomorrow expect that power to be delivered (and get money for it), while other providers are planning to do something else with their power. The company mentioned may or may not have that much power available.

sigurdjs 3y ago
They cannot produce that amount of power and needs to buy it back on the secondary market. Will likely cost around 100Meur.
- codetrotter 3y ago
  FTA: > "We are working with other market parties to solve this extreme situation," it said. Sounds like they are working on an agreement with the others to avoid their mistake turning out to be as costly as that. It’s probably in the interest of all of the participants that this is resolved with a less costly outcome. After all, who knows which of them will be the one making a similar mistake next time. It’ll be good for them then, if they played nicely now as that can inspire how future happenings will play out.
- kragen 3y ago
  this is similar to how knight capital lost 440 million us dollars one afternoon in a trading bot bug and had to get merged with one of their competitors. this isn't quite that big
deleted 3y ago
[deleted]

7thaccount 3y ago

The market price is based off the cost of the marginal MW for some of these auctions. They tried selling power, but someone accidentally said they'd sell for a very large negative euro per MW hour amount and that set the price for the entire market and obligated them to pay the market to sell power. This is pretty rare, but not unheard of.

YetAnotherNick 3y ago
Can't officials just place a bid to buy power at whatever price(negative?) to even out the extra power that is not there?
- 7thaccount 3y ago
  They prob didn't notice until the market closed. Even then, you can't just undo a bid like that unless they have some kind of emergency clause to fix mistakes like this.
- miohtama 3y ago
  Sales are final. The seller (Norwegian Kinect Energy) will need to negotiate with other major marker participants to bail them out. But it’s likely in the interest of everyone of not to let them collapse. The markets would be in disarray if there would be undo button for a trade. Preparations need to be made by large industry participants for every daily allocation.
  - euroderf 3y ago
    It's Scando, so i would imagine that if the relevant ministers in FI SE NO all sign off, and no major market players (like Fortum) object, then they'll unwind it and fall back to replaying the previous day's bids. Or is this impossible ?
    - miohtama 3y ago
      It's impossible to undo because a lot of bids are build on the top of other bids. You would need to undo tons of history. A lot of legit players and traders would lose money. They would sue for market manipulation. Let one who makes mistakes to pay for them. However this does not prevent doing other trades on the top this trade to other direction. It is the question who catches the falling dagger and pays for the mistake of others. See a similar story here https://en.wikipedia.org/wiki/Knight_Capital_Group https://en.wikipedia.org/wiki/Knight_Capital_Group

hallux 3y ago

Well, electricity consumption in Finland will very likely spike tomorrow. People with a certain type of contract for their electricity will actually earn money for using a lot of electricity. Don't know what the implications for the network are, but I don't think such unnatural spikes in consumption are good for it.

usr1106 3y ago
No, you still have to pay for transfer.
- ttkari 3y ago
  My current transfer fee is 0,03€/kWh. There is also the electricity tax (0,028€/kWh) and energy sales commission (0,004€/kWh). With hourly energy rate of -0,50€/kWh any usage will lower my energy bill for the current month even considering all the above costs.
  - usr1106 3y ago
    Ah thanks. The rule of thumb "you don't earn" applies to "ordinary" negative energy prices caused by favorable weather. Obviously here the price was so extreme that old wisdoms no longer apply. Myself I enjoy the comfort of a fixed rate contract. No efforts in trying to optimize consumption profile over days and weeks.
- creer 3y ago
  And besides paying for transfer you also need capacity available for transfer.