Donatas Brazuilis, Head of VPP partners and business development, wrote in Elektriala, an important industry publication in Estonia, about how the energy markets were doing in May.
The spring months brought a remarkable turnaround to the balancing markets. While April saw market focus stabilize and margins cool down slightly, May once again demonstrated just how volatile and lucrative the flexibility market can be – especially for those capable of reacting at the right moment using a smart EMS (Energy Management System).
Overall system profitability is becoming increasingly dependent on how quickly and accurately software can identify the best arbitrage opportunities between the intraday market (NPS) and mFRR ancillary services markets. A comparison of April and May data from our portfolio illustrates this perfectly.
Shift in Volumes: Focus Moved from Down-Regulation to Up-Regulation
Over the two-month period, the total volume of activated energy grew steadily (by approx. 5%), but a fundamental shift occurred in the type of service the power system required to maintain balance:
- In April, the need for down-regulation (reducing production or increasing consumption) heavily dominated.
- In May, the picture reversed drastically: the system was in acute need of additional energy, which drove up-regulation volumes up by over 50% compared to April.
Financial Leap: Profitability Surged by Nearly 80% Powered by EMS
Although the activated volume grew only marginally, the potential profitability earned from the market made a near-cosmic leap. In a symbiosis of smart EMS and market volatility, the portfolio’s total mFRR margin grew by a staggering 78% compared to April.
The main driver was an explosion in up-regulation prices. While the average margin earned per up-regulated megawatt-hour (MWh) in April was approximately €95, in May it jumped to an average of €166 per MWh.
The Vital Role of EMS: Two Days Generated 40% of the Entire Month’s Revenue
Behind these numbers lies a stark truth: in energy markets, not all days are created equal, and revenue is not distributed evenly. A massive chunk of May’s profit was earned during just a few crazy days when market prices hit extremes. Human capabilities have their limits, but an intelligent EMS can capture these anomalies from among hundreds of bids in real time.
The absolute peaks of May – the days when the market caught “fire”:
- May 13: A true golden Wednesday. The market required massive up-regulation, and prices skyrocketed past the €1000/MWh mark. This single day alone generated nearly 23% of the entire potential profit for May.
- May 20: Another extremely lucrative day for up-regulators, contributing an additional 16% to the total profit.
- May 2: This day stood out for its strong need for down-regulation, proving that a flexible portfolio can create value in both directions.
Conclusion: The Future Belongs to Automation
The results from May are black-and-white proof that without an efficient EMS, market participants are simply leaving money on the table. The anomalies of May 13 and 20, which combined to deliver nearly 40% of the entire month’s added value, are not situations a human can plan in Excel or manage manually. Success in the mFRR market lies in the ability to be in the right place within a fraction of a second and automatically provide the exact direction the grid needs at a critical moment.
