Real-time energy trading data: an essential tool

Energy trading is increasingly complex and taking place at a faster pace; with multiple commodities, inter-connecting business functions and increased reporting requirements to consider in a challenging market of higher costs and lower energy prices.

As a result, the industry’s business processes continue to change significantly and more organisations are investing in Energy Trading and Risk Management (ETRM) systems that provide the flexibility to grow and evolve with the business. However, there is one significant new software capability that, despite its ability to deliver enormous benefits and competitive advantage, is not being fully utilised.

In a world where energy has moved from a stable longer-term horizon to a faster paced renewables market, and where volatility and liquidity are closer in on the forward curve, the emphasis for many businesses is increasingly on intra-day trading and less on forward period trading. Alongside this, survival in an era of higher costs and lower energy prices means having to increase efficiency and focus on protecting margins.

Being able to access data quickly and efficiently is essential in this challenging energy market. Demand and production must be forecast or managed on an ever shorter-term basis, and so timely and accurate position data is critical to the responsiveness of a business.

Organisations need to be able to access data in near real time, however, many energy businesses in the UK do not have this capability.

Many businesses are using ETRM systems based on old technology, or are using spreadsheets, so will usually have to wait until the end of the day, or even the next day to get a true understanding of their exposure across the business. The more complex the operation is, the more risk there will be, and, while individual traders will know what their portfolio looks like, they will be unable to see the picture as a whole.

This lack of knowledge will lead to missed opportunities and may make an organisation risk averse.

However, ETRM systems built with a modern architecture and that make use of the latest technological developments handle data differently, and can provide granular trading reports in near real time.

Some new systems disaggregate the trade immediately at the point of trade, storing more data in greater detail. It supports multiple time series granularities down to 15 minute intervals or lower, which means that, when there is the need to look at positions, the data is already available to view, and organisations can access it quickly and with ease.

In a fast-paced and challenging market, real-time position information should be an essential component of a modern ETRM system. Organisations should be looking at their systems to see if they have the architecture to achieve this important capability, and if not, planning for the future. Greater flexibility with fast and simple access to positon data is only likely to become more crucial over future years.