Been reading up on virtual transactions, but haven't found anything that explains it very well. My understanding is that it is a way to profit between the day-ahead rate and the real-time spread.
Can someone maybe explain this and give an example please?
Bump
Why someone created this stupid "virtual power transaction" term is beyond any reasonable sense. Big words for a simple thing.
Anyway... it comes down to one of the following: 1. just closing out your position before the date & time of power delivery. or 2. Not delivering on your position (receiving or paying the imbalance price aka real time price)
Example 1: On Wednesday I sell 100 MW on the day ahead auction for delivery between 10:00-10:30am on Thursday. On Thursday at 9:30am I buy back 100MW of 10:00-10:30 power through the intraday power exchange. Since I bought back the whole 100MW, I don't have to physically deliver the power and made a profit or loss on the price difference.
Example2: On Saturday I speculatively sold 200MW at $45/MWh of Thursday 9:00-10:00 power through the DA power auction. I thought "hey it's a long weekend holiday, people are going to leave town, or get hammered and wake up in the afternoon, but the operator's forecasts says normalish demand for tomorrow, and on top of that solar generation is going to be very high". Since my position was flat for this period before the auction, I am now 200MW short for 09:00-10:00 On Thursday I see the intraday has a $32/45 bid/ask. I don't like the price. I continue into the delivery period without actually delivering the power. The imbalance price turned out to be $23, so I have to pay the TSO $23/MWh of non delivery. (45-23)x200) = $4400 profit
Example 3: It's Friday 7:14, I buy 50 MW of power for 7:30-8:00 deliver at $35/MWh, which I don't intend to physically take. Between 7:30-8:00 half the population decided to turn on the kettle at the same time, creating a high imbalance (not enough power). The TSO ends up turning on some high cost generators to avoid a blackout which would cause the nation to riot over missing their morning tea. Imbalance price skyrockets to $130. Since I didn't physically take 50MW out of the power system, I get paid the imbalance price (it's as if I'm selling back to the system). ((130-35)x50)/2=$2375 profit
I trade European Power, your region might not have an Intraday Power Exchange so you might be limited to Day Ahead vs Real Time price (aka Imbalance price aka System price aka Real Time price)
Can I buy you a beer?
I never say no to a beer
Virtuals in North American ISOs are actual products that can be traded unlike what Azer has described in the European markets. Essentially a Virtual Bid or Offer allows a market participant to take a long or short position into Real Time at Day Ahead prices. Your bids/offers are cleared in the day ahead model similar to how gen or load would clear. You then take that position into Real Time and you're financially settled.
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