The Three-Headed Dragon: Electricity, Trading, Analysis

This paper provides a comprehensive introduction to the Russian Wholesale Electricity Market, which the author characterizes as a "three-headed dragon" consisting of electricity as a unique commodity, multi-stage trading mechanisms, and price analysis methodologies. The first section explains why electricity differs from other market goods due to its inelastic demand and inability to control power flows, and describes how both electricity and capacity markets operate in Russia alongside various participant types. The second section details the four trading stages with special focus on how participants submit bids and how the day-ahead auction determines nodal prices through optimization. The final section presents a practical approach to price analysis using the Thomson Reuters Eikon Power Russia analytical product, demonstrating through real examples from 2017-2018 how marginal price changes can be explained by analyzing demand, supply components, and price-dependent thermal generation.