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The story of our first “autotrader”

How VisoTech built trading automation back in 2012

first-autotraderIt’s hard to imagine, but VisoTech is twenty years old! We thought it would be interesting to take a look into the past – a look at the roots of our most popular solution, the Periotheus autoTRADER.

The autoTRADER as we know it today was first built in 2015, after EPEX SPOT released an API for intraday power trading. But did you know that VisoTech created a tool with automated trading functionality several years before? A solution way ahead of its time!

The story begins in 2012. A new Natural Gas Act was passed in Parliament the year before in order to implement the EU’s Third Energy Package and to further liberalise the natural gas market. One of the changes required by this legislation was the role of the Market Area Manager. Gas Connect Austria (GCA) – the transmission system operator for the eastern Austrian gas network and a subsidiary of OMV – was given this role for the Market Area East.

The Market Area Manager is ultimately responsible to ensure a balance in the gas network. Each market participant must feed the same amount into the network that they take out. If a market participant fails to do so, the Market Area Manager must take action to correct the situation. Specifically, the participant receives an imbalance notice, then a warning to immediately correct the situation. If the imbalance is not corrected the Market Area Manager carries out a forced balance, buying or selling gas on the gas exchange in the participant’s name.

Since all of this must happen quickly, it needs to be automated. We built GCA a balancing tool to do the following:

  • Collect the the sums of each of the Balance Group Responsibles’ gas flows
  • Calculate the balance
  • Communicate the potential need for forced balancing
  • If necessary, place an order on the exchange

In other words, an “autotrader”!

It was an intense project. Software developer Martin Zelger was asked to lead the team. He had only been at VisoTech one year and it was his first big project. A detailed specification was created together with the customer. Since time series management, scheduling and other key functionalities were already developed, the team could concentrate on the core business logic. Spending two days a week on site, Martin and the rest of the team were able to successfully create a strong solution on time, including multiple protections such as limit management and an emergency stop.

There was just one hitch: there was no way to test the system in advance. If it didn’t function correctly when the new market regulation took effect, GCA could face expensive penalties. Unfortunately the cutover to the new regulations was scheduled for January 1, 2013: meaning the implementation had to occur on a holiday. No matter, the team took the party to the customer site, complete with their own New Year’s Eve buffet.

The integration was going smoothly; everything seemed to be coming together well. And then suddenly, a communication error occurred. The team checked feverishly through the code, until Johannes finally discovered the culprit: a problem with dates. A solution was put into place and everyone was out the door in time to celebrate with their families.

The next day it was clear that the solution functioned as expected. In fact, GCA continued to use the balancing tool in their role as Market Area Manager until the role was transferred to Austrian Gas Grid Management (AGGM) in 2017. Since then GCA continues to operate the tool as a service provider to AGGM.

The success of this solution showed us what was possible in terms of automated trading and was a major inspiration for the development of the autoTRADER. Naturally, today’s solution is much more complex. We provide interfaces to numerous exchanges as well as brokered OTC, along with connectors to the most popular ETRM systems and a wide variety of data sources.

Above all, the challenges of short-term trading demand much more sophisticated strategies. Our flexibility marketing algorithm, for example, requires complex optimisation, accounting for a wide variety of parameters and limits. And while today’s autoTRADER was first used for trading on power markets, we’ve now come full circle to offer fully automated trading of natural gas.

Together with our customers we are truly shaping the future of energy trading. We look forward to seeing what the future will bring!

 


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