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by Yes Energy
Power trading is a nuanced, complex, and constantly evolving industry. Monitoring 60-second power plant production and transmission line flow data enables real-time traders to stay a step ahead of market moves.
The Situation
Since virtual power traders only submit bids once a day, there’s a 14 to 38-hour lag between bids and settlement, depending on the market. That’s why some virtual traders consider minute-by-minute monitoring optional for day-ahead trading. However, several of our virtual power trading clients have an opposing view.
Here are four ways Yes Energy® clients use Live Power® data to enhance their trading.
1. Understanding Current Power Generation Activity and Transmission Constraints
To predict what’s going to happen, you need to understand current market dynamics. Without a strong foundation, day-ahead trading assumptions can be inaccurate.
Seeing inter-zone transmission flow to spot real-time congestion is critical to that foundation. For example, when a new constraint appears, you need to know how much power nearby plants are generating because they may exacerbate or relieve the congestion. Viewing changes in power plant output before, during, and after congestion occurs allows you to better understand the current picture, informing your decision making for day-ahead power trading.
Congestion shift factors and Live Power monitored plants, as seen through Yes Energy's tools
Understanding the larger relationships behind plant behavior (e.g., when different plants turn on and off) strengthens that foundational understanding and so does being able to see constraints in the market and how they affect each node. You also need to know what type of fuel (i.e., gas, wind, or solar) is affecting the constraint. The ability to view transmission outage and congestion data on detailed maps and charts is a key part of this process.
In the Constraint Profile module, you can use Live Power data to create histograms showing the correlation between generation output and congestion. For example, if we look at last month’s data and divide a plant’s output into three categories (i.e.: 0-100 MW, 100-200 MW, 200-300 MW), we can analyze how many times we saw congestion on a particular constraint in each of those categories. From there, we can establish the larger patterns of congestion in order to diagnose what’s going on.
In addition, the Time Series Analysis module allows traders to view Live Power data alongside price, load, and generation forecast data to generate scatter plots. This information gives you the ability to survey the magnitude of congestion as well as correlations within the congestion to provide clear visual queues between market fundamentals and outcomes. Essentially, Yes Energy’s superior data delivery allows you to spend your time acting on data instead of aggregating it.
Virtual power traders report these tools help create a solid foundation for bridging the gap between what’s happening right now and the day-ahead power market, helping to test and validate their assumptions about future market conditions. The tools also free up their time so that they can focus on what matters most.
Live Power generation and line flow data viewed alongside nodal prices and transmission constraints
2. Validating Reported Generation Outages
Another way you can use the Live Power data is to confirm or disprove reported outages. Being able to see online/offline dispatchable capacity and unit-by-unit output helps you track unit commitment and evaluate day-ahead spreads.
For example, if sources report that a plant will be offline from January 1 to 10, you have an advantage if you’re able to verify that information before placing your bids. Live Power lets you check in on January 1 to see whether the plant turned off or skipped the outage. You may see that the generation dropped when you expected it to, it dropped a bit later, or perhaps it’s still running strong – information that allows you to adjust your bids accordingly.
If Live Power data confirms the initial report of generation dropping off as forecasted, the tool increases confidence that the forecast was accurate, and the planned outage as prescribed will likely be valid. Because real-time data is delivered every 60 seconds, Live Power allows continual monitoring in case power generation comes back online. This visibility into the supply side of the equation gives you the confidence to adjust your bidding strategy when activity doesn’t align with forecasted reports.
3. Leading Indicator of Wind Forecast Error
Live Power tools also serve as a leading indicator of wind forecast error. With the rise in renewable penetration, wind has become a dominant force in pricing in many ISOs. When wind is forecasted to be low but comes in much higher (or vice versa), it creates a tremendous amount of volatility. Live Power helps you anticipate that volatility.
If you see a wind farm drop off in the real-time market, you can quickly adjust your pricing. Live Power enables you to view renewable production on the geographic “edges” of the market, allowing you to make similar adjustments for the next day.
For example, if you see wind farms in West Texas (i.e., Amarillo, Lubbock, and Odessa) drop off more than expected as you’re placing your bids for the next day, you recognize that tomorrow’s wind will come in lower than expected and can adjust your bidding accordingly.
In another likely scenario, you may see forecasted wind drop off a day early, helping you update your day-ahead bids to account for that risk. Viewing renewable production on the periphery of the market changes in ISO-wide fleet performance is important information to track.
The second leading indicator for forecast error is wind farms that turn on but generate less power than anticipated (or none at all) due to self-scheduled curtailments. Since wind energy facilities can claim tax credit on every kilowatt-hour of electricity sold for 10 years after a facility comes into service, when those tax credits expire, financial incentives may cause the farm to run at lower levels when prices drop below a certain point. By analyzing historical data, Live Power lets you view curtailment activity at various wind farms.
For example, if you see that a wind farm has a capacity of 200 MW but is only producing 100 MW even with blustery wind, they’re likely curtailing their output. You can then combine that knowledge with Yes Energy’s pricing information to discern the cutoff price and more accurately forecast that wind farm’s future output levels under similar conditions.
4. Forecast Generation for the Next Day
The best way to price your bids is to have a generation forecast for the next day. To build that forecast, you need to have a solid set of historical information.
In one example, combining Live Power's historical generation data with fuel cost information allows you to see how much it costs a coal or gas plant to generate power. If you expect power prices to be greater than that amount, you expect the plant to run, and vice versa. You can then use those historical outputs to build a model to predict likely output.
Live Power data from Barney M. Davis and gas prices, which could be used to train a model
For wind, you could use historical data alongside the National Weather Service forecast and wind speed data to create an initial model for a wind farm. Once you train your model on those aspects, you can clarify the relationship between those variables, then add future variables to predict generation output.
Creating a complex generation forecast takes time and skill. Virtual power traders without an R or Python programming background can create forecasts based on different scenarios and/or assumptions.
For example, if you are analyzing the relationship between a gas plant and prices at a particular node and have used Live Power historical data to identify full output, 50% output, and 0% output, you can then run models at each setpoint to determine price expectations, blending potential outcomes to calculate a final price forecast.
Yes Energy’s purpose-built software allows you to back-test your trading strategies and build more sophisticated models with access to terabytes of historical data dating all the way back to the markets’ inception.
Stay Ahead of Market Moves
With today’s rapidly changing power grid, you need instant visibility into what’s happening to stay a step ahead of market moves. Understanding what’s happening right now plus what’s happened historically is the foundation for virtual trading. To determine a price forecast, you need a generation forecast, and to create a generation forecast, you need historical generation data.
Live Power delivers fastest-in-industry reporting of generation and transmission flow data to support your trading. Real-time data is delivered every 60 seconds and fully integrated within Yes Energy power analytic tools, providing unparalleled visibility into the supply side of the equation.
Want to Learn More?
With Yes Energy, you can trust that your data is clean, complete, accurate, and reliable. With billions of data points to navigate and million-dollar decisions to be made, having Yes Energy as your liaison into the power market frees up your time for what matters most.
Learn more about how Yes Energy can help you Win the Day Ahead™.
