The power trading operations landscape is in an ongoing state of change. Whilst increasing harmonisation of formats and processes through the work of The European Network of Transmission System Operators (ENTSO-E) and the standardisation provided through Energy Storage System (ESS) in theory simplifies parts of the scheduling process, in reality, historic versions of the standard are in still in use across many countries. Furthermore, some markets, notably Great Britain, do not follow these standards at all.

Increased price volatility, the rise of renewables (and the resulting need for more dynamic processes), the complexity of cross border scheduling, as well as the need to adapt to changing balancing rules and technical changes, create challenges for power operations teams today.

In this blog, we will discuss delve further into these challenges and explain how software tools can help to address them.

Increased price volatility and the rise of renewables

Renewable sources like wind and solar along with their inherently changeable production plans have driven an increase in intraday trading as traders and producers seek to balance these more changeable assets. The reality of this change is borne out by EPEX and Nord Pool who are both reporting new records each year in intraday trading volumes in European electricity markets ​(EPEX Spot, 2023; Nord Pool, 2024)​.

Whilst in the past a generator/supplier would sell/buy most of their volume in the forward markets or day-ahead market, today with more liquidity and value of flexibility of assets, a trader must be able to find value also across multiple short-term markets, In turn an operations team must be able to schedule these changes of production along with related trades and balancing actions in order to meet their responsibility to the TSO.

Closely related to the rise of renewable energy resources (RES) is the large increase in battery investment seen in Europe over the past years. To trade batteries a new paradigm of timely computational requirements is needed for fast decision making, as both forecast data and market data will shift decisions related to when and how to charge and discharge the battery for an upcoming period, and which market is predicted to be the most profitable.

The impact of batteries

Commercial strategies for batteries are also evolving as markets becomes more saturated. In the past, developers could make their return in frequency response and dynamic containment. However, they are now dependent on more sophisticated profit optimisation across markets ​(LCP Delta, 2023; Modo Energy, 2023)​. I.e., using a day-ahead hourly price spread arbitrage model as a baseline and then trade subsequent markets ​(Abramova & Bunn, 2021)​. With production plans for batteries being changed closer to delivery than traditional assets, as well as being more flexible compared to RES, the operator must be able to execute trades, change production plans and still be able to comply with market regulations to notify the TSO and market operators in a timely manner. 

As an example; a battery in the Netherlands, optimising charge, and discharge decisions, typically discharging the battery in the peak hours, and charging the battery in the off-peak hours, with an optimal bidding strategy spanning day-ahead, intraday and reserve markets must comply with several complex processes. In addition to sending bids and offers to exchanges, the ability to send nominations for day-ahead and intraday markets as well as bid activation responses and consumption and production schedules to TenneT NL are all required. For an operations team, the ability to carry out these multiple processes to ensure real time management of both contractual and physical positions is critical to execute the business case of the battery.

Rules and technical changes

To better cope with more changeable production and demand profiles and to better exploit the flexibility available to balance a grid in real-time, TSOs are moving towards smaller time granularities.

Norway, Sweden, Denmark, and Finland recently changed their settlement period granularity to 15 minutes (Nordic Balancing Model, 2023) with Czech Republic and others expected to follow in 2024 and 2025, as derogations from implementing 15-minute granularity under commission regulation (EU) 2017/2195 (European Commission, 2017) establishing a guideline for commercial balancing comes to an end.

OTE will migrate to the latest ESS scheduling formats this year, and in Germany AS4 is being phased in as the standard market communication protocol for electricity in line with its use in gas. All these changes put pressure on operations teams who must use resources to understand their impact before updating IT systems and processes to accommodate them.

Cross-border capacity complexity

Developments of single day-ahead coupling (SDAC) and single intraday coupling (SIDC) have shifted capacity auctions from explicit (capacity separate to energy) to implicit (capacity and energy together), maximising interconnector usage and lowering prices for consumers.

However, implicit capacity auctions do still require an explicit shadow auction as a backup should there be any issues with the coupling algorithm solutions causing a fallback mode to be initiated. This means a power operations team may wish to retain the ability to bid for and schedule cross-border capacity to reduce exposure to localised price spikes in this scenario. Furthermore, long-term capacity as an important hedging tool for a power trader on an interconnector is still auctioned in an explicit auction and requires nominating to be scheduled.

Capacity holdings in themselves are an area of great complexity for operations teams. Understanding how much capacity is available to use by interconnector direction, and delivery period (days, hours, weeks, months etc.) and having that information readily available when needed is crucial for the activities of a trading or dispatching desk.

Today the Joint Allocation Office (JAO) serves 41 bidding zones, holding 20,000+ auctions per year (JAO, 2024) indicating the scale of the operations needed to bid in for all cross-border capacity and thereafter keep track of capacity rights. Interconnector capacity products have also seen innovation with N:B nominations (i.e., one party is sending power, another one party owns the capacity, another one party is receiving power), capacity transfers (transfer capacity between parties) and resells (resell purchased capacity into a lower granularity for use-it-or-sell type capacity) now being common occurrences via JAO’s platform, providing additional opportunities for the trader but also additional work for the operations team to ensure nominations match capacity holdings and are scheduled appropriately.

With each European market still being slightly different from another, the complexity of managing the correct actions to take to schedule cross border capacity requires a highly experienced power operations team to manage a set of fallback and backup tasks as well as deadlines should there be any unforeseen complications.

As an example of the complexity of managing the correct scheduling tasks related to a specific trading opportunity is as follows: if a trading desk transfers power purchased in Great Britain to balance a sale in France for a specific delivery period, first intraday capacity on IFA1, IFA2 or ElecLink for the relevant hour and direction must be purchased in advance via JAO. JAO will then issue a rights document indicating the capacity allowance and reference to be used in a nomination to the interconnector. In the meantime, power for the relevant hour must be sourced in GB for the same CET hour. Once the power flow between Great Britain and France has been determined including loss adjustments on each side, the following operational tasks must be fulfilled ahead of delivery:

• Send a nomination to GB-FR interconnector in hourly granularity in MW with no decimals which includes the capacity rights reference and power flow amount for the relevant hour at the mid-point of the interconnector.
• Send a nomination to RTE (French TSO) in half-hourly granularity in MW with up to 2 decimals to notify position including OTC trade made.
• Send (or make sure) a nomination to Elexon (GB market operator) in half-hourly granularity in MWh with up to 3 decimals is sent to notify trades.

Should one of these nominations fail to be received for one reason or another, a fallback process must be followed for the nomination to be received by the TSO or market operator in a timely manner and normally in a different nomination format using a different communication protocol – often requiring manual inputs or copy and paste of values from the primary process.

Due to these complexities, ‘what-if’ scenarios and high failure costs, power operations and cross border flows especially tend to justify more manual processes and larger dedicated resources. Confidence in software that automates unnecessary button clicking, handles all aspects of your power operations including capacity and position management, nominations and fallback/backup handling should be a high priority to free up operational resources to other tasks such as process improvement, market analysis and optimisation.

Brady’s PowerDesk Suite:  PowerDesk Balancer and Scheduler

Brady’s PowerDesk Scheduler software solution features unrivalled market depth, connecting to 30+ European TSOs and market operators requiring only one input format to enable the scheduling of positions in any supported market. TSO specific nomination formats and communication protocols (sftp, email, web-services, ECP) are all managed within the application, freeing your team up to focus on your core business while the system handles the technical challenges of communicating with TSOs.

Monitoring real-time statuses for each sent schedule to the TSO and market operator through the UI dashboard and with automated email alerts, allows issues in scheduling and matching to be spotted and resolved. Automation of sending schedules can be facilitated with ‘cron’ jobs ensuring no gate closures or deadlines are missed. Straight through processing of position data received from external tools, and fallback options can be defined ready to be executed should the primary nomination option not be available – enabling you to take appropriate actions promptly to avoiding imbalances.

PowerDesk Balancer aggregates all your physical trades from exchanges, interconnector flows, and OTC trades by market, TSO or legal entity depending on trading setup – in real-time. Balancer parses capacity files from JAO to allow for cross border capacity flow planning including loss-adjustment. Once positions are updated, and positions are ready to be scheduled, nominations can be sent to the interconnector’s nomination platform (along with trades to the TSO) – simplifying position and capacity management through its full integration with PowerDesk Scheduler. Automated balancing strategies can be configured to move imbalances across borders, between counterparties or into an auction i.e. EPEX.

In the ever-changing landscape of power operations and scheduling, solutions like Brady’s PowerDesk Scheduler and Balancer are a ‘must have’ to support teams to get the most out of their portfolio, reduce the risk of manual errors and reduce the technical barrier to entry of power scheduling.

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Bibliography

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