The Nordic power system, like Brazil´s, has an abundancy of hydro power sources. Since these account for, approximately, 50% of the energy generated in the region, it is vital for market players to correctly predict the future level of both reservoirs and spot prices.
Eikon, an information distributing system developed by Thomson Reuters, uses SDDP to build a detailed representation of the Nordic power system, and provide its thousands of subscribers – which are comprised of traders, producers and consumers – with price forecasts, in order to help them in their decision-making processes, such as contract pricing or identifying arbitrage opportunities.
According to Reuters, for the past 12 months, SDDP has correctly predicted the direction of energy prices in 100% of cases. Over the last one and half years, the model´s hit rate was 94%, with SDDP correctly indicating the direction of prices in 15 out of the previous 16 months. Its long-term performance is equally impressive: since March 2012, SDDP has indicated the right direction of the market relative to the actual, realized prices (the hourly spot average for the contract period) in 58.6% of the cases.
Eikon has been using SDDP since 2008, and its results have been monitored, continuously, since April 2010.
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