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Solution

Algorithmic trading is the future of electricity intraday markets

The market is changing at a high pace

The European short term electricity markets are in constant transformation. The proceeding European market integration, the expansion of renewable energies and the growing volumes result in higher volatility, complexity and speed. This brings about new challenges as well as new possibilities for all market participants. Remaining with conventional trading, may mean to miss out on important trading opportunities.

Increase efficiency while lowering costs

Algorithmic trading helps you to seize those opportunities. It lowers your operational expenses by cutting costs for 24/7-desks. But more importantly, algorithms can consider many different decision factors at the same time and at a much higher speed than human traders.

Endless trading opportunities

Furthermore, significantly higher volumes can be managed simultaneously. With an increased volatility and trading volume, it becomes difficult for human traders to track dozens of contracts at the same time. Yet, with algorithms you have unlimited trading possibilities. Even if you simply transfer (existing) human decision-making rules into an algorithm in a first step, error rates are going to reduce and decision quality and reaction times are going to improve.

Focus on strategy rather than continuous execution

We strongly believe that you should rather focus on the decision-making rules you want to apply to the market, than executing these rules yourself. The PowerBot team is happy to support you in this transition.

Algotrading

Regular fields of application – most common use cases

Position closing

The most basic and reoccurring use case for PowerBot is to close open positions of the day-ahead market to avoid balance energy. If your production portfolio includes renewable energies, like wind power or photovoltaics, it is recommendable to close forecasting errors on the intraday market. However, there are also other possible applications for position closing. By calculating your options in real time and closing open positions on the intraday market, you can use intraday trading to your advantage.

Speculative trading

Besides standard use cases, most energy trading companies also have their own, speculative strategies to generate profits from the intraday market. With its open architecture, PowerBot is perfect for implementing and running your individual strategies locally. PowerBot keeps them secure and you can use the historical database to constantly improve your strategies. Algorithmic trading allows your analysts and data scientists to identify and execute their own trading strategies.

Flexibility marketing

Power plants with flexible generation capacity, like gas turbines, pumped storage hydropower stations or virtual power plants, are able to earn additional revenues on the intraday market. PowerBot facilitates to monetize your flexible capacity by automating your flexibility marketing with marginal price limits, sell-and-buy-back strategies etc. For more complex decision making situations, you can also connect PowerBot to any optimization software of your choice and feed trading opportunities for even better results.

Strategy implementation options

The needs of energy trading companies are quite different when it comes to strategy implementation. Some companies want to use standard algorithms that are delivered with the software, which can be parameterized and others would like the vendor to create tailored algorithms for them. But there are also companies, which want to develop their very own trading strategies. And regularly, customers want to change from standard to custom algorithms over time. With our open and flexible white-box software architecture and our in-depth market know-how, we offer all of these approaches.

Tailored/standard algorithms

If you are looking for an out-of-the-box approach for standard use cases, like position closing or flexibility marketing and do not want to develop your own algorithms, this is the solution to go for. You decide, we take care of the rest.

Let us know about your situation and our team will help you to identify a suited strategy for your use case. As energy trading experts, we also support you in modelling your use case and creating a business case, e.g. if you want to move flexible assets from the control reserve to the intraday market.

In consultation with our trading experts and application specialists we will develop the perfect algorithm for your business case. As a next step, we take care of the implementation of the algorithm and set up the interfaces with your ETRM system, if requested. Sit back and relax, while we implement algorithmic trading at your company.

And if you want to move to build-your-own-algorithms later, you can switch at any time and may build upon the already existing structures.

Summing up

  • Low-threshold and full service setup
  • Standard/tailored algorithm that fits your needs by our energy trading experts
  • No programming skills needed
  • Possibility to move to build-your-own-algorithms later on
  • Initial project costs based on your needs

Build-your-own-algorithms

This is the way to go if you would like your analysists, data scientists or trading experts to create your own trading strategies, e.g. in Python. Also if you are focusing on prop-trading strategies, this PowerBot solution is the right choice for you.

We truly believe that in-depth know-how about trading strategies and optimal order placement are the core competencies of energy trading companies. This means that your company internalizes all the knowledge about automated and algorithmic trading.

We have originally built PowerBot for one specific purpose: To make the implementation of your own algorithms as easy as possible. You can solely focus on the implementation of your algorithm, we take care of all the rest – from risk management, access rights management, cross-trade recognition to reporting and so on.

Creating your algorithms is an easy task for analysts, data scientists or programmers, as our web service provides libraries for all relevant programming languages.

Summing up

  • Integrate your own strategies and algorithms
  • No initial set up fees
  • Know-how stays within the company
  • Employees with programming skills required
  • Higher inital efforts on your side

Hosting and licensing

PowerBot is a cloud hosted web service with a monthly subscription fee, so you do not need local infrastructure. The software architecture is built on a microservice approach and follows an API first design. This gives you full flexibility for the integration and you are not bound to any specific ETRM system. Alternatively, PowerBot can also be hosted on-site at your company.

If you want to learn more about the technology behind PowerBot, have a look at our features page.