The aim of reducing carbon dioxide (CO2) emissions has created a shift from harnessing energy from fossil fuels to renewable forms of energy.
Especially wind energy is a significant player in the renewable energy sources market, and there must be a development in the renewable energy sector. A way to develop the energy industry is power trading.
Power trading has opened up the competitiveness of the energy market and has created competitiveness in the renewable energy sector.
What is power trading?
You can compare power trading with the trading of basic material but with a more complicated edge. What differentiates power trading from normal trading is that you can’t have the product in stock. The reason for this is, there must be a balance between consumption and production at all times.
Energi Danmark A/S is a significant player within power trading in Europe. In addition to trading, Energi Danmark A/S also balances consumption and production in the Nordic countries and Germany. They manage an extensive wind portfolio in Denmark, where a large proportion is active in, e.g., downregulation, and thereby, it helps to keep the balance. On the consumption and production side, a daily forecast of expected consumption and production for the coming day is prepared on an hourly basis for the next 24 hours. These are traded on the power exchange, which handles the price curves for all market players, forming a price shift for supply and demand – the actual spot price.
Power trading is a critical factor for the future and development of the renewable energy industry: “We try to fit the various technologies in the electricity market and utilize them in the best possible way to support the market. By doing this, we maximize the earnings for our customers,” says Aslak Jakobi Kristensen, Head of Production, Origination at Energi Danmark A/S.
Today, electricity is a tradable commodity based on supply and demand. This means that renewable energy sources can easily be traded. The energy industry has evolved from predictable production to more fluctuating renewable energy, resulting in increased flexibility in today’s energy market. This has been a vast milestone in the energy industry, as this was impossible over 20 years ago. Power from renewable energy sources has not always been part of the free market but is supported by aid schemes. It was first in the 1990s when countries started to open up for electricity trading, which went on the free market (Winther, 2020).
Storage of green energy is the way forward
In a dream world, we would only use power from renewable energy sources. However, it’s not that simple. Balance is an important word when you are working with power trading. When there is no wind, sunlight, or water, it’s impossible to harness energy from these green sources. And this creates an imbalance in the market.
Therefore, you have to utilize power from traditional power plants to retain the balance. However, this is beginning to change: “The development we see within technology brings new economic opportunities on a larger scale. More energy sources will in the future be able to contribute to balancing the production. Here it will also be exciting to follow the development of Power-to-X and the technology behind Gridscale batteries,” says Aslak Jakobi Kristensen, Head of Production, Origination at Energi Danmark A/S, and continues; “It is the possibility of storage that can make the difference. If we can’t store energy that is generated from renewable energy sources, then we can’t operate 100% with power from wind turbines, solar PVs, or hydro.”
Power trading is a unique and complex market, where there are challenges to transport the power to the grid:
- Storage
- Uncertainty of forecasting the weather
- Geographical areas
When we deal with generating power from renewable energy sources, it’s not only storage and forecasting that can create a challenge. In addition, there are some geographical areas where the energy infrastructure affects the possibility of transporting renewable energy to the grid. The more renewable energy, the greater demands of the cables.
The wind is blowing while the turbines are standing still
The development of technology is crucial in expanding the renewable energy industry, for example, tracking the turbine’s data when it has stopped. Even though the wind is blowing, the reason for stopping a wind turbine is to balance the power, so the correct amount is transported to the grid. Therefore, the electricity must be produced when it is consumed to be in balance (Winther, 2020).
With power trading, it is essential to have the possibility of balancing, as well as shutting down wind turbines to stop producing too much energy. If you produce too much power to the grid, an imbalance will occur. This is also why storage is needed on the market to regulate the power generated from renewable energy sources to the grid.
“For power traders, the best solution would be to balance the grid optimally by producing more reliable forecasts for production and consumption. Today, there is so much energy on the market that you can’t rely on missing or wrong data. If we are successful in developing the solutions to store renewable energy, power traders and the people in charge of balancing the production can create much better forecasts, and by that fuel the green transition towards a greener energy production,” says Christian Daather, Senior Sales Director at SCADA International.
“Also, the development of SCADA systems has improved the potential of using wind turbines and solar PV and harnessing the energy even though it’s not the primary power that is being used. Our OneView® SCADA system provides power traders and the people in charge of balancing the production with a great and controllable overview of energy production,” Christian Daather adds.
Winther, D. C. (2020). Visual guide to the power grid: Inside the greatest machine in the world.
The Visual Power Grid Company, Denmark.
