Energy Scenario Management
Traditional ETRM/CTRM systems are no longer sufficient if energy sector participants want to effectively assess, manage and simulate risk across the entire business.
By Guy Isherwood A
dapting to new rules and increased competition in physical and financial markets, navigating the nuances of national and regional markets, and increasing trading
and evaluation capabilities as the role of energy derivatives becomes more prominent, are just some of the key challenges that energy market participants grapple with every day. Energy companies transact in multiple commodities,
markets, instruments, assets and currencies, and utilise multiple transportation methods. They make their buying, selling and dispatch decisions by constantly tracking and analysing price trends, price correlations, supply/demand imbalances, physical system constraints, weather forecasts, and a plethora of other factors, both internal and external to the company. Even the more ‘simple’ energy trading
a decision matrix of such large dimensionality, poor decision making can often results. Assumptions and prioritisations are made – often unconsciously. Consequently, sub-optimal outcomes often occur – even for the most experienced and talented energy traders and portfolio managers. As a result of this complexity, the systems that are used to
... just employing a
activity can involve complex deal structures and specific, highly detailed logistical requirements. When humans are faced with
traditional ETRM system is no longer enough
capture, track, analyse and account for energy company’s activities – the trading, risk management and reporting systems – need to be built to be highly configurable. But just employing a traditional ETRM system is no longer enough as, for many technology providers, this integration process has been only partial at best. True optimisation is required because if optimisation is not truly integrated with energy trading and risk management, then its usefulness is undermined.
What if the trader/manager had a screen to run all necessary analyses simultaneously? Together with ‘what if’ analysis and
Energy Scenario Management Figure 1: Information Availability ... Decision Making
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worldPower 2010
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