The lower tail
Race to the bottom?
A number of themes are developing post by post. We’re looking at tail dynamics, volatility, feedback effects. There are links to system design, and how platforms (or is it a solution?) support approaches to all the energy complexity. About half of the time we build reflection from data exploration in our ‘new environment’. The rest of the time we’re connecting threads from the top down.
Here we continue our aFRR exploration. By the by we review an article by an ancillary service provider that reprimands ‘low bidders’ for leaving money on the table.
We like to think about extreme prices. We are prone to salience bias (we overweight what is vivid and eye-catching). And, unless we override it, our monkey-based mental machine (no disrespect to monkeys intended) is subject to the availability heuristic (we recall rare spikes more easily than hundreds of seemingly dull and even days).
Peaks dominate our imagination, even as most of life happens through the twists and turns on lower ground.
Getting picked at the margin, hitting the price limit in continuous Intra-Day, or getting in (and out) of the right IPO might actually be bad for you. You might be tempted to confuse luck with skill. Worse, you might get lucky twice and start betting on yourself without really understanding what you’ve done.
Focusing too much on the top is generally a mug’s game. And I’d argue that this is especially true in the aFRR capacity markets. The top is incomplete. We don’t get to see the bids that didn’t make it, they’re all topped off in public data.
