5 Valuable Alerts for Power Traders this Summer
by Sarah Hatch on Jun 13, 2019
Power Traders are skilled at consuming large amounts of fast-paced data followed by making fast decisions. A critical tool for catching the “right” market signals are smart alerts. Alerts that let traders know the moment certain conditions have been met and a trading opportunity is possible.
Alerting on a single condition can be useful and might be a tool that many traders use. But being able to set up alerts that are based upon multiple conditions means that traders can better filter out “false alarms” or just basic noise. Afterall, trading strategies are rarely dependent on one single criteria but a multitude of possible market drivers.
Here are 5 alerts we’ve set up using the Alerting function in QuickSignals but you could use the same parameters to set up alerts in whichever software solution you’re using to be alerted. These alerts help Power Traders filter out the noise and be the first to know when a market signal has appeared.
ERCOT is at Risk of Energy Volatility
Congestion is Directly Affecting PJM West Hub Prices
Forecast Errors Reach a Set Limit
Load & Wind Relationship Criteria
Generation Ramp Indicates Changes in PJM West Hub RT LMP
Read on to learn how to implement these valuable alerts!
Alert #1: ERCOT is at Risk of Energy Volatility
This alert will let you know when there is risk of energy volatility in ERCOT and an increased potential scarcity pricing.
When the Capacity with Energy Offer Curve Available to Increase SCED Base Points (reported in MWs) crosses below 3000 and the total Regulation up Service* that has not been deployed (reported in MWs) crosses below 100 there is an increased risk of volatility. When these conditions occur, Traders will be alerted and can then dig in to determine if making changes in their positions is necessary.
Alert Type: Multi-Conditional
Condition #1: ERCOT Cap w/offer IncSCED <3000
Condition #2: ERCOT Undeployed Reg-up <100
*The Regulation Up is an Ancillary Service that provides capacity that can respond to signals from ERCOT within five seconds to respond to changes in system frequency. Such capacity is the amount available above any Base Point but below the HSL of a Generation Resource and may be called on to change output as necessary throughout the range of Capacity available to maintain proper system frequency. A Load Resource providing Reg-up must be able to increase and decrease Load as deployed within its Ancillary Service Schedule for Reg-up above the Load Resource’s LPC limit.
Alert #2: Congestion is Directly Affecting PJM West Hub Prices
PJM Traders will want to set this alert up to stay on top of changes in West Hub LMP that are related to congestion. Using the difference between the Real-Time LMP for Western Hub and the value of the Western Hub Tick Predictor, traders can stay on top of when there is a large discrepancy between the current and predicted next tick. When seconds matter to your decision making, this alert can ensure you look up at your Dashboard to make fast trades.
Alert Type: Spread Value
Spread Value #1: PJM Western Hub LMP-RT
Spread Value #2: PJM Western Hub Tick Predictor *
Condition: Spread Value percent change increases or decreases by 5%.
*A Yes Energy calculation using 15 second dispatch rates to calculate the next 5 minute price.
Alert #3: Forecast Errors Reach a Set Limit
Wind / Load Forecast errors for ERCOT, SPPISO & MISO can be catastrophic for portfolios. This alert provides insight into how accurate (or inaccurate) forecasts are shaping up in real time. This example uses SPPISO Wind Forecast but this same alert could be applied for any other type of forecast or ISO.
Alert Type: Single Value
(100)(A-B)/B with the following variables:
A = SPPISO Real-Time Load
B = SPPISO Forecast Load
Once this Formula Series is created, you can then set up an Alert for when this error meets the set criteria. The level of error that is worthy of an alert will depend upon the selected data series (Wind, Load, Weather etc) and the ISO. Here’s an example for Wind Error:
Single Value: Wind Error Alert (created using the Formula Function above)
Condition: Threshold < 0 (indicates wind is coming in below forecast)
*Pro Tip: There are many variations of this that could be useful, including, for example, Load Forecast Error between zones in ERCOT to help predict congestion potential (i.e. North -> Houston)
Alert #4: Load & Wind Relationship Criteria
This Alert is especially useful for SPP, MISO & ERCOT where wind can make or break a position. For this alert you will establish thresholds for both wind and load to let you know when the wind is low and load is high.
Alert Type: Multi-Conditional (ERCOT example)
Condition #1 - Load - Real-Time Actual > 65,000 MW
Condition #2 - Wind Real-Time Generation < 2,000 MW
Alert #5: Generation Ramp Indicates Changes in PJM West Hub RT LMP
Generators ramping up or down can indicate a potential change in pricing. For this example we have identified a generator that, when it ramps, often indicates changes in PJM Western HUB Real-Time LMP. Setting the alert using Live Power Real-Time 1 minute generation data ensures that you know the minute a generator begins to ramp giving you a jump on your decision making.
Alert Type: Multi-Conditional
Condition #1 -Western HUB Real-Time LMP > 75$/MWh
Condition #2 - Bath Co Real-Time Generation > 0 MW