The Electricity and Gas Trading System is a web application used for organizing online auctions. It is currently being used for natural gas and electricity auctions but the built in algorithms are generic and can be used for other commodities as well.
There are three entities taking part in the auction:
● Auctioneer – in charge of implementing the auctions and having the status of administrator of the application.
● Supplier – in charge of defining products, specifying the offered quantity and supply conditions, and timely reporting of the above to the auctioneer. During the course of the auction, the supplier is monitoring trading activities but he or she has no privilege to directly manipulate the prices. There is one seller in the auction selling goods to multiple bidders.
● Participant – also called member or buyer is entering bid orders and taking decisions to increase the price or step out of the auction according to the movement of the auction price.
The auction system is operating with standardized products. Products are defined at the time when new auction is being announced by the auctioneer and supplier. The most usual auction is concluded in three phases:
● Phase 1 – participants register their interest by entering bid orders at the starting price, one order per each participant. Orders can be changed or removed until the end of the phase 1.
● Phase 2 – the system is increasing the auction price in predefined intervals (e.g. 5 minutes) and during each interval participants can decide to stay in the auction with the initial volume, decrease the volume or completely drop out of the auction. Once the participant drops out of the auction, he or she may not re-enter the auction. When the total amount or all remaining bid orders fall below the predefined volume, the phase 2 is completed.
● Phase 3 – participants who remained in the auction enter their final bid price. At the end of the phase the system sorts remaining bid orders by price and sequentially makes trades until all auctioned volume is used up.
The system supports 18 different types of auctions.
The system was developed for Borzen, the Slovenian electricity market operator, who owns the copyright of the application.