Brady Technologies and Reactive Technologies Collaborate to Pioneer Profitable Event-Driven Trading in Power Markets

Brady Technologies and Reactive Technologies, two leading players in the energy market, are pleased to unveil a joint paper based on Reactive Technologies' expertise in real-time grid monitoring and Brady Technologies' algorithmic trading platform, PowerDesk Edge.

The joint partner paper, set to be unveiled at the E-World Energy & Water event in Essen, delves into the challenges posed by the increasing penetration of renewable energy into power grids, particularly the impact on inertia levels. In low-inertia systems, grid events caused by the unplanned outage of power generators or interconnectors can lead to significant disruptions in frequency, influencing market prices as traders adjust their positions.

The key findings of the partner paper include:

  • Profitability of Event-Driven Trading Strategy: The paper demonstrates that a systematic trading strategy utilizing an event detection signal based on public frequency data and accurate measurement devices, such as Reactive Technologies' XMUs, can be profitable. The strategy, showcased through offline analysis of trades, leverages fast event detection to identify grid events swiftly.
  • Algorithmic Trading in Response to Renewable Energy Challenges: As renewable energy penetration increases, traditional trading strategies are evolving towards shorter trading horizons. The paper highlights a shift in focus to intraday and real-time markets, with an emphasis on automated or algorithmic trading strategies. The performance of such algorithms is evaluated against the Volume-Weighted Average Price (VWAP), a widely used metric in the industry.
  • Fast Event Detection for Timely Trading: Reactive Technologies' event detection solution, based on a fleet of XMUs reporting real-time data to the Reactive Cloud, enables grid event detection in under 1 minute. This rapid detection is contrasted with the industry standard of 15 minutes for formal notice publication under REMIT obligations.
  • Impact of Reaction Time on Profitability: The paper analyzes the impact of reaction time on the profitability of the event-driven trading strategy. It emphasizes that quicker identification and response to grid events lead to increased profits, showcasing the importance of reducing overall event detection and trade execution lead times.
  • Real-world Case Study: The partner paper includes a comprehensive case study based on historic trade and order data, comparing the proposed event-driven strategy with a baseline strategy. The results indicate that the event-driven strategy, informed by grid event signals, outperforms the baseline strategy, with profitability increasing as reaction time decreases.

Brady Technologies and Reactive Technologies will be presenting their technologies and discussing the findings of the partner paper at the E-World Energy & Water event in Essen. The paper is available on Risk.net Journal of Energy Markets. Attendees can visit their respective booths to learn more about the collaborative efforts shaping the future of event-driven trading in the dynamic landscape of power markets.

Press Contact
Sarah Keeley
Head of Marketing
Reactive Technologies
Sarahk@reactive-technologies.com

 

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