What we do
We are an active market participant across many of the American grid operators, and play an active role in moving supply and demand, through trades, to provide more accurate and stable pricing to the market.
The grid
Electricity grids are systems that are centered around balance.
Balance is the continuous need to reach an equilibrium between supply and demand of electricity. Under-supply causes blackouts, and surplus supply affects the frequency, which can ultimately damage equipment connected to the grid.
Underneath the balance sits an economy that drives the exchange of power between parties participating in the grid. The financial stability of this economy is directly linked to the ability to forecast supply and demand, and thus to the price formation of power.
What makes balance hard
Maintaining balance is a complex task due to the sheer number of individual pieces moving at once. Examples of such factors can be seen below.
Uncertain renewable supply
Wind and solar output is set by the weather, not by a schedule. Forecasts are revised right up to delivery, and the gap between what was expected and what is generated has to be covered by something else, at whatever it costs at that moment.
Unforeseen outages
Generators trip and transmission lines fail without notice. The system re-dispatches around the loss in minutes, and a single constraint binding in the wrong place can separate prices across neighbouring nodes for hours.
Evolving energy demand
Demand is no longer a predictable daily curve. Data centre construction across the US is adding large, dense, always-on loads faster than the network around them is being built, and electrification is reshaping the rest of the curve underneath.
Price formation
A cornerstone for determining electricity prices is the day-ahead auction; it sets a price for the 14:00 hour the afternoon before. From that moment the number is under revision: every new wind forecast, every outage, every hour of load that comes in above plan moves what the hour is worth, until the real-time market settles what it was actually worth.
Power is among the most volatile commodities traded anywhere. It cannot be stored at scale, so an imbalance cannot be carried forward — it has to be cleared by price, in the moment. And because security of supply is non-negotiable, the system pays almost whatever it takes to stay balanced: when reserves run short, prices reach levels no other commodity sees. That volatility is what we research and trade.
Thousands of prices
Across the American ISOs, the Locational Marginal Price (LMP) system is used throughout to price electricity at specific geographical locations. It is a hierarchical pricing system, which causes electricity grids to have numerous different price points: PJM alone publishes more than 10,000 priced nodes, and across the US ISOs there are over 60,000 priced locations in total.
Each of these locations carries a price for every hour of the day, so there exist more than a million different prices — and as many assets to trade — across the American ISOs on a daily basis.
We enjoy the search for the needle in the data haystack. If the same applies to you, we could be on the same team.