The world of Data Science, year after year, is increasingly permeating towards the Energy sector, within which Artificial Intelligence techniques are being used to support an array of strategic decisions of various market stakeholders. One of the cases, perhaps less known, of this reality is represented, for example, by the predictive analyses that are used to optimize trading within the Power Exchange market.

Although it is now nearing its 13th birthday, few are aware of its existence and the dynamics that characterize it. For this reason it seems appropriate to provide some notional pills on the Power Exchange, also known as IPEX (Italian Power Exchange).

It is on the Power Exchange that producers and energy suppliers exchange the quantities of electricity that will later be used for the supply service intended for end consumers.

Energy trading takes place daily on an hourly basis, according to a defined “marginal price” system. This price, which represents the consideration for which the energy is purchased, corresponds to the so-called PUN (translated as “Single National Price”), i.e. the average price that is formed on the Stock Exchange. The PUN is in fact the result of the auctions that cover the energy demand foreseen for each hour of the following day.

These operations, aimed at matching supply and demand, take place electronically every hour and the correct functioning of the system is regulated, in economic, legal and qualitative terms, by the company Gestore dei Mercati Energetici (GME).

However, it should be pointed out that, although the Power Exchange can be defined as the main driver of the electricity market, it only affects one sphere of many. In fact, based on the temporal order and the type of operators involved, the electricity market is divided into different sub-types:

  • READY MARKETS: Markets attributable to the Power Exchange and, therefore, to the management of GME:
    • DAY BEFORE MARKET (MGP). The MGP market is an auction market where energy is traded on an hourly basis for 24 hours the next day.
  • FORWARD MARKET. Market for the negotiation of future (forward) energy contracts with the obligation of delivery and collection.

Each of these areas of the energy market presents complexities that cannot be addressed accurately in a short article. However, with this brief description of the markets and the Power Exchange, it is hoped that we have aroused the curiosity that a sector like this deserves, which with the transition from the protected market to the free market will certainly capture increasing attention from various stakeholders.

Author: Francesca Giannella | Senior Data Scientist DMBI Photo by Matthew Henry on Unsplash

Related content

Real Estate and Artificial Intelligence

The use of Artificial Intelligence is steadily making its way into the real estate sector in an increasingly incisive and aggressive manner. There are even those in the industry who speak openly of a future revolution in this sector by these new technologies.

Read more »

AI & climate change

Last summer’s reports clearly show how delicate and precarious the balance of our ecosystem is. For experts in the field, extreme climate phenomena are destined to increase in frequency and intensity, if the levels of CO2 in the atmosphere are not reduced as soon as possible.

Read more »

AI: new task forces against Covid-19

Viruses and bacteria have always lived with us, but if we learned quickly to defend ourselves from the largest and most fearsome predators, it took us much longer to get to know the existence of these microscopic organisms and to understand how to protect ourselves from their insidious attacks.

Read more »

DMBI consultants

via Candido Galli, 5 – Frascati
00044 – Roma
Fax | Tel +39 06 9422 421
Part. IVA 09913981008