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Powering Up Profitability: How ETRMs Can Supercharge Energy Trading Companies

Energy commodities are notorious for their volatility, and the increasing use of intermittent renewable energy generation is only exacerbating the unpredictability of global power markets. According to the International Energy Agency, almost 95% of the global power capacity increase through 2026 will come from renewable energy. Australia is leading the way in this transition to clean energy, with 32.5% of the country's electricity generated from renewable sources in 2021. The government is projecting that this number will surpass 50% by 2025 and 69% by 2030.

Given this shift towards renewable energy, companies with significant asset-based energy commodity exposure or participation in regional wholesale markets need a modern energy trade and risk management (ETRM) solution to manage the increasingly fast-moving and complex power markets. Unfortunately, many ETRM systems currently in use may not be equipped to handle the challenges posed by the changing nature of power markets, including the adoption of renewables.

As wind and solar power become more cost-competitive globally, governments are moving away from incentive structures such as feed-in tariffs, leading power generators and renewable energy developers to seek new structures to finance and operate renewable projects. Long-term power purchase agreements (PPAs) have emerged as a leading option, with a modern ETRM needing to support the PPA contract lifecycle, from deal capture to risk management, reporting, settlements and invoicing.

Over the past decade, ETRM solutions have undergone a digital revolution, with the energy industry transitioning from on-premise to private cloud-based or Software-as-a-Service ETRM systems to tap into the power of big data and digitization.

However, due to the collapse of energy commodity prices in the 2010s, many ETRM initiatives were put on hold or scaled back to reduce costs, just as rapid market changes were making modern ETRM capabilities more essential.

Despite preconceived notions around the time, effort and cost of implementing a new ETRM, companies need to recognize the importance of upgrading their systems to keep pace with the changing nature of power markets.

Oriyyn can assist energy trading companies in several ways:

  • Orivyn can help energy trading companies select the appropriate ETRM system that aligns with their specific requirements, and offer guidance on how to configure, customize, and integrate the software with other existing systems. By doing so, we can help optimize your trading activities and improve operational efficiencies.

  • Orivyn can offer valuable insights and advice on the latest market trends and regulations in the energy trading industry. This can help energy trading companies stay up-to-date with the constantly evolving regulatory landscape, and navigate changes in trading rules and protocols.

  • Orivyn can provide energy trading companies with the necessary expertise and support to effectively manage their trading activities and navigate the complex energy trading landscape.

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