• Europe
  • Market Effects
  • Transactive Energy
  • Resilience

The Day the Integrated European Power Market Broke Down

Roberto Rodriguez Labastida
Jul 05, 2019


A computer error in the European Power Exchange (EPEX Spot) highlights some of the issues that a transition to a transactive energy model could face.

On June 7, EPEX Spot said that several areas of the European integrated power market decoupled during a day-ahead power auction. This affected France, Germany, Luxembourg, Austria, Belgium, the Netherlands, and Britain.

This means that the electricity markets of those countries—which usually operate as one large market with small differences in prices caused only from restrictions in the connection points—suddenly had to operate on their own.

What Were the Consequences?

The effect of the computer error on prices was significant. The preliminary day-ahead auction results showed that the Belgian day-ahead prices were €2,233.39/MWh ($2,527.30/MWh), while next door in Germany the price was at minus €47.60/MWh ($53.86/MWh). The large difference between prices and the weather forecast for a sunny and windy day in Belgium raised the alarm. Sunny, windy days usually mean low electricity prices. EPEX decided to suspend the market.

EPEX announced that an unknown market participant apparently transmitted a corrupt data package in a bid to EPEX. It did not mention a hacker attack or malware, but the data package brought the trading server at EPEX down and led to a server restart. EPEX removed the corrupt bid with the restart—but the bid was transmitted again. This not only completely disrupted the main computer, but also the backup servers of the redundancy system.

How Can This Be Addressed?

In such a case, the regulations of the European market coupling system provide for decoupling of individual market areas. From this point on, auctions for the following day will no longer be held within the European electricity markets, but in each country individually.

This event shows how transactive energy markets could be disrupted (by mistake or as an attack). Any player in the market can input corrupted data. Large transactive energy areas will be formed by a series of nested local markets, so the collapse of one local market could affect the whole system.

Thankfully, EPEX Spot’s processes ensured that the chaos in the market did not affect the physical operation of the grid. Nonetheless, the event resulted in significant economic losses. Traders reacted to the high prices in Belgium by adding more capacity at a high cost to them, but in reality there was far too much capacity. When the market reopened, the prices in Belgium collapsed to -€134/MWh (-$151/MWh).

Resilience Is Crucial but Protocols Are Not Well-Defined
Transactive energy platforms must ensure market resilience governed by clear protocols on how to handle emergency events such as overly high bids. The majority of transactive energy market participants will be passive, relying on automation software to optimize their economic returns. It is vital that these participants are sheltered from economic losses due to system crashes or malicious interference. At present, this is not well understood.