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SunGard Identifies Ten Trends for Utilities in Energy Trading & Risk Management

Trip Ray, managing director of SunGard’s Energy & Commodities business, said, “Utilities are in the midst of a transformation; from the emergence of supergrids and renewable energy to continued focus on evolving regulations. To capitalize on these changes, utilities are looking to introduce innovations in technology to help drive revenue protection and decrease operational costs. For instance, they are seeking to increase data transparency, replace aging infrastructures for improved efficiency, and leverage technology to reduce operational risk.”

SunGard has identified ten trends for utilities in energy trading and risk management:

1. As “supergrids” continue to connect many smaller and more local grids, energy buyers and sellers will have a broader, more competitive market open to them, impacting energy trading timing and prices.

2. Compliance regulations are driving increased trading of renewable obligation certificates, renewable energy guarantees of origin, and climate change levy exemption certificates which will require utilities to have the proper technology in place to support these trades.

3. Renewables are pushing utility companies to increase their analytics and operations capacity in order to balance fairly predictable demand with the more unpredictable nature of on-and-off sources like wind and solar.

4. Discussion around the creation of a single European energy market is driving increased scrutiny and demand for regulation for energy traders across Europe.

5. In an effort to bolster lagging support for emissions markets, some governments are considering setting minimums for carbon prices in active or developing cap-and-trade markets to encourage market participation.

6. As more utilities switch to natural gas for power generation needs, companies are dealing with operational convergence issues resulting from the differential nature of the gas and power markets, thus prompting them to seek solutions that holistically manage those market operations.

7. Smartgrids will continue to fuel increased focus on data for decision support and analytics, and big data will drive utilities to create warehouses for aggregation.

8. Costly efforts to decarbonize the power industry are prompting energy companies to develop solutions that offer visibility, manageability and predictability into energy use, cost and performance.

9. Effects of weak demand, uncertainty in energy costs, and stagnant rate cases are driving the use of statistical modeling for improved credit risk analysis and to drive collections efforts.

10. Utility companies will continue to move IT to private clouds to help them reduce costs and focus on core competencies.

“The utilities sector, like much of the wider energy market, is in flux as it awaits word on several key regulatory requirements,” explains Patrick Reames, managing director of CommodityPoint. “From aging infrastructure to the movement towards aggregating and communicating big data to the many different regulatory concerns, utilities are at a cross roads and it's clear they will need to increasingly leverage technology in order to meet and stay abreast of these emerging challenges in the coming years.”