Embracing change in a dynamic market

On November 22nd 2023, AFK Vannkraft took a new step in evolving its energy trading process.

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AFK Vannkrafts' hydropower plant at Bøylefoss

Recognising the need for more accurate energy production forecasting, the company has integrated Volue’s Algo Trader Power into its operations. By doing so, AFK Vannkraft is preparing for new regulations and optimising its trading capabilities.

The shift to Algo Trader Power
The decision to adopt Algo Trader Power was driven by the challenges inherent in energy trading. But first, let's try to explain how energy production works today: an energy production company bid their production on the day-ahead market by sending in a production plan. So, the producers are selling their future power production in advance. But sometimes, unexpected things happen, a generator might go out for an hour, or the water rush might be higher than predicted. This leads to an imbalance in the energy market that the producer must fix, by either selling or buying on the intraday market. This imbalance is either traded manually by a broker or by a software system that trades it automatically. If the imbalance is not corrected, the producer may be fined.

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To tackle these challenges, AFK Vannkraft implemented Volue’s Algo Trader Power. This software automatically trades the imbalance as it happens, foregoing the need for a broker to trade the imbalance.

"Algo Trader enables more precise adjustments to production plans in real time, thereby reducing the risk and cost associated with these imbalances,” says Jan Roald Evensen, Operation Manager at Bøylefoss.

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Operating Officer of AFK Vannkraft at Bøylefoss, Jan Roald

A partnership approach
The relationship between AFK Vannkraft and Volue is more than just client and service provider; it's a collaborative effort.

“The way the markets are evolving, producers will get fined harder for imbalance in production. The fines today are at 800 euro for each MWh, so if a 10 MWh aggregate is out for 10 hours, the fines alone will be 8000 Euro. So, the whole point of using Algo Trader Power is to get down the imbalance, get down the costs, and prepare to meet a market with new regulations and criteria,” explains Jan Roal.

Future focused
Looking ahead, AFK Vannkraft is positioned to further adapt to the evolving energy market. The use of Algo Trader Power is just one aspect of a broader strategy aimed at improving market participation and operational efficiency. As market dynamics continue to change, AFK Vannkraft’s proactive approach positions them well for continued success and growth.

This integration of Algo Trader Power by AFK Vannkraft at Bøylefoss is more than a technological update; it’s a strategic move towards more efficient and adaptive energy trading, aligning with the broader vision of Arendals Fossekompani to innovate and grow sustainably in the energy sector.