(Bloomberg) -- The head of Europe’s biggest spot power exchange said he regrets the turmoil created when an IT glitch caused German electricity prices to spike 550% last month.
The price was the highest since the worst days of the energy crisis in 2022 but this time was caused by Epex Spot SE rolling out a “ feature upgrade.” The chaos that ensued shows how easily market integration can break down.
The effect for traders was more than €300 million of losses in German power alone, based on volumes traded. Industry felt the pain too with Feralpi Stahlhandel GmbH, a large steel manufacturer, temporarily shutting down its plant near Dresden to try to limit losses.
The response from traders has been angry and outraged with complaints about the poor communication from the exchange during the event.
“I understand that your trust and confidence in markets may have been shaken,” Chief Executive Officer Ralph Danielski wrote in a letter to traders, saying he’ll set up a task force to make “improvements.”
The issue caused auctions in several countries to “de-link.” German day-ahead prices jumped to a 22-month high while neighboring France slumped, creating the widest spread on record between the two nations.
Day-ahead power markets in central-western Europe are usually linked with an algorithm matching supply and demand across borders, transporting electricity to where prices are highest.
The exchange said in a statement that there hadn’t been any failures in contingency procedures.
“Prices were determined in line with rules and procedures and are consistent with the orders received,” Epex said.
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