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So you know how to build energy infrastructure, your cities are growing, as are your profits? Let’s see if you can take this to the next level.

Understanding the market will allow you to:

  • Crush competition that wants to steal profits in your city

  • Ensure high power buyout price even if the power spot price is low

  • Make your income resilient to swings

I’ll talk about a few basic strategies. But first make sure you undersntad how the commodity futures market works. I assume you already know what are market orders, and trades.

Trade is not delivery!

With shares, currencies, or in most other games (like Simco). Once you buy something on the market, it magically disappears from sellers warehosue and reappers in yours. This doesn't happen with commodities.

The moment a trade is executed, the money change hands rightway, but goods are not moved. The seller party has now obligation to deliver the commodity to the buyer. But goods are not moved, yet.

This is why we have orders (and trades) for each tick. If you sell Coal in T+3, it means you get money now, but you only need ot deliver the coal in T+3. It will be automatically taken from your warehouse at tick computation.

Note: You can close the position yourself by executing reverse trade even before anythign is supposed to be delivered. At times, you can make profit like this, without any goods being moved.

Not fulfilling a delivery obligation

If you do future trades, sells, you end up having short position (you owe goods to the market) these will be automatically delivered. In case, you cannot deliver the goods, the position will be closed by simply executing another trade. You essentially buy back the commodity you owe. So you do not have any obligation to deliver anything.

Power

The power works the same way, with the exception that it cannot be stored. We are ignoring batteries fot the moment.

The power pricing mechanism ensures only power that is needed is produced. So how does the trading come into play?

Anyone can create positions by byuing/selling power. The same amount that is sold, is also purchased, so in sum, it will still be zero. At the end of the tick, everyone has to have zero position, this is ensured by closing everyones position by doing reverse trades at spot price.

At the end of the tick, everyone has to have zero position.

Strategies

Hedge production against price swings

This is one of the very basic things you want to do, to ensure stable and predictable revenue. Imagine a situation, where your asset in the city produces 30MWh a tick. The price in the city is $300 so you are happy. But it can change in the next tick. Would you like to ensure you can still sell for high price?

Go to the market and see for which price the power can be sold for future ticks. Is it $290, $250? You need to decide, whether guaranteed $290 is better for you than $300 which is flaky.

(It depends on circumstances: competitors int he city, weather forecast)

If you decide to hedge. You can go to the market, and execute sell orders for 30MWh for future ticks. Notice you got paid.

Now, one of 2 thigns can happen:

A) You really produce the 30MWh in those ticks, which means your position will end up beign zero. You have essentally produce 30MWh and sold for $290, regardless of the spot price

B) For some reason your plant does not run. Your short position will close automatically for spot price. So you will buy 30MWh back at spot price, so your position is zero. If the spot price ends up being $300, you take a slight loss. If the spot price ends up being very low, like $30, you made a huge profit, even though your plant did not run … Your plant likely did not run, casue the spot price was too low, but you do not care. You are a trader, you can make money, even without running plants. Let your competitors produce and sell power for $30, while you make profits selling at $290.

Spot price dumping - push competitors out

This strategy is trickier to execute. It assumes you have majority of the production in the city to be able to influence spot price significantly, and that competitors did not hedge themselves.

You simply go to the maket, sell a lot of power at high prices. Then set your plants to produce at $30 for those ticks.

If successful, the spot price will drop, messing profits for your competitors, while you woudl be just delivering power agasint yout short positions. Still making considerable profits.

Your competitors will try to invest somewhere else …

Rocketing spot price

This is another tricky strategy. A great control over city power production is nescessary. Imagine a city with low power spot prices for long time: $30 - $50 range. Everyone is eager to hedge themselves, and your competitors and city are offerign to sell power for relatively low prices: $100 - $150 range.

Now you come in. Buy the power, give them $150 per MWh. You will end up with long positions for the next ticks.

At this point, switch part of your infrastrucutre to maintenance/upgrade/sleep, whatever, just make sure it's not producing. The other part of your infrastruture should be producign at $300, to make sure the spot price is pushed up as high as possible.

What’s going to happen is that your long positions will be closing at $300 spot price, generating extra profit.

It’s best to masterfuly time this strategy with the point where city popualtion stops degrading and starts to grow, making it easier to rocket the spot price. It also doesn't hurt to take weather forceast into consideration.

Milk the subsidies

You may have noticed that at the very beginning, your base city compensates you if the spot price is very low. The first 16 ticks, you get compensation if the spot price is below $220.

So imagine these scenrios:

A) You produce 50MWh and sell for $300. Great price, subsidies not needed, $15,000 profit!

B) You produce 50MWh, the spot price is very low $30, subsidies jump in, you get (30 + 190). $11,000 profit: Not good, not terrible (wink)

C) You are the Wolf of Wallstreet. Sell 50MWh on the market for $290, then drop the spot price to $30, adjudting plants pricing strategy. You will get (260 market + 30 production + 190 subsidy) per MWh. Whopping $480 per MWh: $24,000 profit! That will leave your competitors in dust.

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