Ercot Blowout Day

Having spent several years trading electricity, please be advised that there is not a comparable product to anything else, pure and simple.

The capitalization requirements are significantly greater than any other exchange-traded product, including metals and ANY hydrocarbon-based energy.

And do not talk about VIX anything in the same sentence as power - inc/dec, or term.
 
One of the characteristics of a commodity is its fungibility. Electricity, especially in ERCOT, may not be fungible. The definition of fungibility I use is if one unit of the good is substantially equivalent to another unit of the same good of the same quality at the same time and place. (wikipedia)

ERCOT converted on December 1st, 2010 to a nodal market. I understand there are 4,000 nodes in this market. At the margin, every incremental MW of electricity produced at a node is not equivalent to another unit at the same time and place. It depends on the system heat rate, the unit's heat rate, and system demand.

Real estate is obviously not a commodity. Crude oil, natural gas, and T-Bills obviously are commodities.

However, I am still on the fence regarding electricity and would appreciate any insight.
 
Noob question regarding electricity trading: can you trade electricity contracts via IB. If so, what's the symbol. If not, how and where do you trade them?
 
Quote from sprstpd:

Noob question regarding electricity trading: can you trade electricity contracts via IB. If so, what's the symbol. If not, how and where do you trade them?
More...

No on trading with IB. ICE, Nymex, and Nodal Exchange offer them. You use WebIce, TT or Ice Mobile for ice. Nymex a broker has to put them in, no one does anything on the screen, and nodal runs an ISO like auction.

You need some deep pockets to play. Margin on Ercot is around 50k for 1 contact. That will go up once they revise margins. If you sold the low and bought the high on the blowout day, you would've lost somewhere around 1.3mm just using one contract.
 
Quote from warrenmurdoch:

One of the characteristics of a commodity is its fungibility. Electricity, especially in ERCOT, may not be fungible. The definition of fungibility I use is if one unit of the good is substantially equivalent to another unit of the same good of the same quality at the same time and place. (wikipedia)

ERCOT converted on December 1st, 2010 to a nodal market. I understand there are 4,000 nodes in this market. At the margin, every incremental MW of electricity produced at a node is not equivalent to another unit at the same time and place. It depends on the system heat rate, the unit's heat rate, and system demand.

Real estate is obviously not a commodity. Crude oil, natural gas, and T-Bills obviously are commodities.

However, I am still on the fence regarding electricity and would appreciate any insight.
More...

Fin power is the way to go. Unfortunately it doesn't power homes. Every incremental MW will be equivalent to another in regards to price received if there are no constraints. All units will receive the same price in an unconstrained market +/- a (typically) small amount for line loss.
 
late to party but what a day... seeing 3k hourly as early as HE 7...think 4 or 5 cleared 400ish...

heard someone lost 55 mm
 
When I traded PJM-W financial forwards I also had up the broker quotes (via IM) for the Ercot heat rates - I remember being told in 2008 by said broker that a German Bank desk lost 15mm in two hours in the Ercot hourly market. Sounds about right.

Blending wind power and nat gas heat rates into a model is... well, difficult.

electricity reliability council of texas. whoa.
 
You must log in or register to reply here.
Back
Top