August 1, 2019 / 2:37 PM / 19 days ago

Algorithm trades hit record on Nord Pool intraday power market

OSLO, Aug 1 (Reuters) - More than half of the electricity traded on the Nord Pool power exchange’s intraday markets in July, a record 52% of the volume, was executed by computer algorithms as trading houses sought to gain an edge in an increasingly complex energy market.

The diversification brought by renewables, coupled with growing competition and digitalisation in European power and gas markets, has lowered margins, shortened contracts and brought an explosion of data for traders to consider.

The computer-driven trades were up from just 13% of volumes in the same month of 2018, the exchange said on Thursday.

Algorithms can examine live data about the output of wind turbines and solar panels, changeable weather patterns, demand and fuel price data much faster, more accurately and at a lower cost than a human trader.

“In our intraday markets we have seen a significant increase in automated trading over the past months. In July we saw for the first time that more than half of our intraday volume across all markets has been traded via APIs (Application Programming Interface),” Nord Pool said in a statement.

The total amount of power traded on the exchange’s intraday markets last month reached 1.12 terawatt hours (TWh), up from 0.61 TWh in July 2018.

However, Nord Pool’s key day-ahead markets saw an overall decline in traded volumes.

While total volumes rose slightly in the exchange’s biggest market, the Nordics and Baltics, to 26.86 TWh from 25.95 TWh in July last year, they fell about a third in Britain to 6.26 TWh.

Across all of Nord Pool’s markets, power traded in both the intraday and day-ahead segments this year totalled 293 TWh by the end of July, down 13 TWh from the same period in 2018.

Nord Pool is one of Europe’s biggest power exchanges and operates markets in the Nordic and Baltic regions, Germany, France, The Netherlands, Belgium, Austria and Britain. (Reporting by Lefteris Karagiannopoulos; Editing by Terje Solsvik and Mark Potter)

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