|
|
|
|
|
|
by rmc1
4331 days ago
|
|
|
> They are irrelevant to the question of whether what is happening is good or whether it should be stopped. I think the key to this question is whether the price differential on the node at Northport was due to natural congestion in the market or virtual congestion caused by traders. Traders like DC energy can participate in day-ahead and real-time energy markets in addition to purchasing FTR deriviates. This is generally a good thing because the traders can compete to supply power in constrained areas. However, it is possible to make uneconomic bids in these markets, especially day-ahead markets, that cause congestion on the grid while only causing a small financial loss for the trader. If a trader can cause virtual congestion on a power line where they own an FTR derivative, then that perceived congestion can cause large price differentials, which causes the derivatives to pay out much more than the day-ahead market loss. And the payout scales with the amount of power on the line where they own a derivative. It appears that the geography bottlenecks in this area, so it's a safe bet that any power lines going through there are very high voltage and moving lots of MWs. In this kind of situation, the trader's virtual load or generation does not indicate an issue with the grid such as poor planning or lack of maintenance. It means that the day-ahead market did not accurately predict actual energy demand due to virtual transactions. If you're interested, here's a paper from a couple years ago with more information about this trading strategy and how RTOs/ISOs could prevent this type of manipulation: http://www.hks.harvard.edu/hepg/Papers/2012/Virtuals%20and%2... |
|
|