<
https://reneweconomy.com.au/regulator-outlines-fears-of-ais-and-battery-trading-collusion-but-home-batteries-could-save-the-day/>
"The Australian Energy Market Commission has finally published its report into
the potential of AIs colluding to push up electricity prices, more than a year
after the report was concluded, but says that the rapid growth in home
batteries could offset some of the problems.
The report from the AEMC, the market rule maker, says the rising use of
algorithms to manage complex battery trading is creating the perfect conditions
for tacit collusion between AIs.
“The risks have increased in recent years due to two inter-related trends, an
increase in information available to participants that has the potential to
reveal information about competitors’ strategies, [and] the development of AI
tools,” the report says.
Algorithmic collusion is when AIs use the information they have to test
strategies and learn to charge higher-than-normal prices, all in lockstep but
without communicating with each other.
If AIs are making collusion easier and cheaper to do, detection is both
potentially much more expensive and difficult.
The AEMC paper acknowledges that it’s not clear how this kind of collusion
would be detected, any methods would be extremely expensive for regulators, and
solutions such as requiring algorithms to be retrained are impractical.
Furthermore, the horse may have already bolted for monitoring “black box”
systems because there is no way to know how it used information to come to an
outcome.
An obvious solution of restricting software known as auto-bidding is also
fraught, with the AEMC saying it’s useful to manage extremely complex systems
and contributes to lower prices.
Big batteries were thought to be an antidote to the high prices set in periods
of high demand, potentially denting the market power of the traditional
dominant utilities. But many of the batteries now being rolled out are owned,
or controlled, by the very same market players.
And already, even without overt evidence of collusion on battery trading by
AIs, batteries are making their market power felt.
In July, quarterly data from the Australian Energy Market Operator (AEMO)
showed big batteries are now dominating pricing activity in the NEM.
Battery discharge set prices at an average of $478/MWh in the June quarter,
almost double the $245/MWh average in the same period last year and nearly
three times the average price set by gas generators."
Cheers,
*** Xanni ***
--
mailto:xanni@xanadu.net Andrew Pam
http://xanadu.com.au/ Chief Scientist, Xanadu
https://glasswings.com.au/ Partner, Glass Wings
https://sericyb.com.au/ Manager, Serious Cybernetics
