This is a Wassily Kandinsky exhibition
at Amsterdam's beautiful HART museum.
But we're not talking about Kandinsky,
we're talking about Picasso,
and not the painter but the algorithm.
This week, the Netherlands introduced
the Picasso balancing market algorithm
and some are concerned that they will
be left in the dark... quite literally!
So there's not been a lot of clarity
about what's going to happen,
when it's going to happen
and what are going to be the consequences.
So, why is this mechanism named after a 20th
Century artist famous for his abstract paintings?
It doesn't mean it's a sketchy mechanism
which leads to abstract results
but I did look it up because
it's just a long abbreviation
and I'm not that good in those
So, Picasso is actually...
harmonisation across the border.
This balancing mechanism has had somewhat of a
rocky ride since its introduction three years ago.
Numerous European countries have delayed
their membership and when Italy joined in 2023,
its power market experienced such huge price
volatility that the country pulled out in March.
The Netherlands joined Picasso on the 17th October and
many in the country remain sceptical about the system.
We might actually see that
we run out of capacity sooner,
but of course we can use
reserves from other markets as well
but the availability of those reserves
actually depends on cross-border capacity,
so we may be able to export reserves to Germany
but we might not be able to import reserves,
so this dynamic is something completely
new for the Dutch market and it will be
Dutch membership was postponed in July
after the country's transmission system operator
Tennet said its systems
were not ready for its implementation.
But is this really the only reason
for concern and our Tennet's assurances
We feel it is a fundamental
change to short-term markets
and it might affect continuous trading as well.
We don't know but there's a good chance
or at least we're not communicated up front.
The consequences of the Picasso algorithm
are no mere abstraction.
They will have a tangible impact
on the Netherlands and beyond.
that we'll see things that we didn't expect
So yeah, it's a whole mouthful but it
basically means reserve power coordination,
very interesting to see what happens.
of limited price impact actually justified?
