Matthew Penfold headshot

Matt Penfold

Vice President of Strategy and Commercialisation, AMS

Algorithmic Trading for Storage Assets in the National Electricity Market

15.45 – 16.45 | Friday 14 June 2019

Matt currently leads the Commercialization of AMS’s algorithmic trading software, with a focus on the development and sales of algorithmic bidding software for storage and generation assets in Australia. Prior to AMS, Matt worked as a Manager in Bain & Company’s utilities practice, focused on strategy and financial due diligence projects in electricity sector across four continents: Australia, Europe, Africa and North America. Matt holds an MBA from UC Berkeley Hass School of Business and a BS from University of Melbourne.

Abstract Outline:

There has been increasing interest in merchant exposed storage in Australia, as developers and financiers explore batteries as an exciting new asset class in the NEM. The first grid-tied batteries demonstrate that substantial value is available to storage in the National Electricity Market: for example, the 100MW Hornsdale Power Reserve battery has earned enough revenue in its first year of operations to cover approximately one third of total project costs. Additionally, revenue forecast studies run by AMS indicate that merchant storage can be highly valuable under a variety scenarios.

However, achieving optimal market participation requires sophisticated algorithmic trading strategies. Bidding batteries in electricity markets is significantly more complex than bidding generation assets, as bids must account for the opportunity costs in each interval. Making trade-off decisions between products (FCAS and energy) and intervals (current and future) in real-time requires thousands of decisions each trading interval, achievable only with algorithmic bidding software.

This presentation will explore the revenue potential for merchant exposed storage assets in the NEM, as well as the challenges to achieving this value.