You may agree with it or not and viewpoints may differ from where you are in the world, but arguably there is a move to switching to renewable sources of energy. Tesla’s company valuation just surpassed ExxonMobil. Royal Dutch Shell cut its dividend for the first time since World War. German parliament approved a coal phase-out. With this shift from legacy energy commodities to next generation renewables, it is time for energy companies to consider doing the same with ETRM system, with core competencies that support their activities around the cleaner energies, including renewables and natural gas: Is your ETRM capability following the market?
According to Darwin’s Origin of Species, it is not the most intellectual of the species that survives; it is not the strongest that survives; but the species that survives is the one that is able best to adapt and adjust to the changing environment in which it finds itself. Well, renewable energy is overtaking fossil fuels such as oil and coal in an energy transition to cleaner energy solutions. The Top 4 sources of clean energy are Solar, Wind, Hydro, and Natural Gas (one of the mainstays of global energy, per the IEA).
With this perspective, when evaluating and selecting an ETRM system, the emphasis may need to be on capabilities that support those energy commodities instead of the legacy fossil fuels. In other words, an ETRM system build for crude, oil products, and coal trading may be considered legacy, whereas an ETRM system excelling in natural gas and electricity, while providing sufficient functionality for legacy commodities in the interim, maybe a more logical choice.
In the journey towards reducing CO2 emissions and electrification, the strong support for natural gas and power in the ETRM system is logical, and when combined with robust functionality for renewable energy certificate tracking and emissions allowances, it is extremely compelling. In order to successfully operate in this new market environment, the ETRM system further needs to be a “live system” to support the near-real time operations, provide ease of integration with various systems, and deliver the automation for effective and efficient operations. Let’s elaborate on a few examples.
Distributed generation: A balancing Act
Part of the energy transition includes a shift from traditional centralized generation to distributed generation, caused by the deployment of renewable energy generation from solar, wind and even batteries. This introduces challenges for Transmission Operators and new responsibilities for electricity providers. As a result, they must engage in sophisticated energy contracting and trading transactions to serve their load efficiently, profitably and in a balanced fashion on a near real-time basis. For the ETRM system this means having the ability to model simple to complex business processes.
Parsing for profit: Portfolio Management
Energy suppliers must be on top of their game when it comes to sourcing energy supply and serving load to achieve reasonable margins in a highly competitive market with often dropping prices. Deploying next-generation technology with a state-of-the-art ETRM system will optimize operations by helping to do the right things and doing things right. That means when managing a power and gas portfolio, the portfolio manager must be able to ‘parse’ it, i.e. to analyse and discover implications, by slicing and dicing the data until arriving at the right level of detail for analysis.
Intraday Markets: Real Money in Real Time Markets
With the emergence of renewable electricity generation, it caused a shift to short-term and intraday trading. Traders use the intraday market to optimize their position to reduce risks associated with unexpected imbalance prices charged by the TSOs, while others see the Intraday Market as an important tool for their portfolio management. Renewable generation is less predictable, introducing volatility, where positions may change rapidly, and decisions are based on multiple information sources. To manage exposures and capitalize on opportunities, it requires a live, real-time system with automated market connections to the SPOT markets
Back Office: Not an After Thought
Organizations are increasingly looking to reduce their environmental footprint, which is leading to purchasing directly from renewable energy generators. As a result, PPAs with wind farms is an important growth area and subsequently leads to increased volumes of GOs. Besides, GOs are tradable products, allowing organizations to achieve environmental targets and objectives. A Next-Generation ETRM system enables more complex structured products for market differentiation and cross border operations. At the same time, the increasing volumes of GO cancellations and customer demands have woken up both risk managers and legal departments to pay attention to the associated risk in GO deals. To manage this operational risk, a ‘new era’ ETRM enables to automate the end-to-end GO/REC tracking and management of processes from generation to assignment and retirement or expiration.
Integrated and Automated
In this era of renewable energy, with commodity markets volatile, relying on End-of-Day processes is just not good enough. And, in an environment where time is money, this requires automation and solid integration with other systems and markets. A modern ETRM system relies on an architecture that has embedded middle-ware technology that supports ease-of-integration including market-connections. Additionally, enterprises need innovative ways to optimize workflows. The combination of ease-of-integration and a highly configurable ETRM system, allows to first “digitize” by being able to capture all required information, and subsequently apply rule-based automation, for example, by proposing an optimized gas flow based on constraints, such location, pipeline, contracts, delivery path, supply and demand side, or automating mundane task in standard contract settlement through Robotic Process Automation.
In 2015, 195 nations agreed with the United Nation that they can change the world for the better. For example, the European Union has set targets for the period 2021 to 2030, to reduce 40% of greenhouse gas emissions, 32% share of renewable energy, and 32% improvement in energy efficiency. An ETRM system is typically used for a long period of time. Now is the time to start adjusting to the changing environment, moving from legacy to next generation. That also applies to your ETRM system.
Consider our offerings:
• TRMTracker: Front-to-Back ETRM
• RECTracker: End-to-end Renewable Certificate Management
• EmissionTracker: Emissions tracking and management
• SettlementTracker: Complex energy contracts settlement