It's leveraged. The gain or loss is a multiple of the difference, not necessarily linked to the initial sum.
He was probably betting a few millions on what appeared to be a relatively safe trade, then a rare succession of events lead to a 1:100 ratio in the other way.
That's not an excuse for engaging in a trade where one can lose that much. Both the investor and market should ensure there is an upper limit for what can be lost. The market to protect itself (since it or the the insurance mechanism lost > $100 million in this case).
You can't set an upper limit for what can be lost unless you force other traders to buy what a short seller is covering. Non-deliverable futures markets with no shorts are not possible, and it isn't practical to make every futures contract deliverable.
The price of electricity is only going to go so high, though. Without leverage, it's vastly harder to lose all your money on a short, because the asset has to double in price. In this case, the spread peaked at about 38:56. Without leverage he'd be down 10 or 20 percent.
He was probably betting a few millions on what appeared to be a relatively safe trade, then a rare succession of events lead to a 1:100 ratio in the other way.