Reports Disruptive Technologies in Commodity Trading | Page 6

Disruptive Technologies in Commodity Trading Markets
unpredictable renewables and less reliant on fossil fu-
els, even for baseload generation needs. Despite the
United States withdrawal from the Paris Accord and
the country’s loosening of some environmental regu-
lations aimed at assisting the coal and oil industries
aside, renewables continue to contribute increasing
amounts of power globally, and are forecast to contin-
ue to do so. This influx of renewables, primarily wind
and solar, has led to significant structural changes,
including the break-up of large utilities keen to spin-
off highly exposed “dirty” generation assets. With
continuing regulatory and national economic support
of these new power sources, significant knock-on
impacts are occurring – increased attention to short-
term and real-time power trading as price volatility in-
creases, the rise of distributed power generation and
the producer-consumer (prosumer) market, and the
need to better automate and strengthen distribution
grids.
- Continuing market liberalization in Europe and the
previously noted regulation of gas and power mar-
kets on the continent are forcing traders to move
away from bi-lateral OTC transactions and towards ex-
change-cleared or exchange-based trading – result-
ing in increased price visibility and reduced basis/
arbitrage opportunities even as cross-border trading
activity in the region increases with the build-out of
the infrastructure and mechanisms to support in-
creased trading activity across country borders.
- As trade margins shrink and profits become harder
to come by, market participants are now focusing on
A ComTechAdvisory Report
other opportunities to bolster financial performance
– including improvements in supply-chain efficiency
via asset optimization, increased activity in short-
term/real-time trading markets and renewed atten-
tion to reducing operational risks and costs. These, in
turn, have further contributed to structural changes
across the industry as merchants and traders have
sought out non-traditional services to help bolster
profitability. These include the securitization and de-
centralization of power generation assets, addition of
specialized data services and even providing direct
market access via web-enabled, digital platforms,
- Data is now everywhere. While regulation and mar-
ket liberalization has catalyzed a vast explosion of
data by forcing increased market transparency (in-
cluding the publication of vast amounts of timely pric-
ing data), technology has given rise to a growing flood
of web-based, electronic information (including social
media) throughout the industry. Accessing and lever-
aging this sea of data via improved data management
and visualization technologies is now a critical capa-
bility in managing risk, recognizing opportunity, im-
proving profitability and growing shareholder value.
Although this list is obviously not a full and compre-
hensive accounting of the many defining changes
occurring in these markets, it is sufficient to demon-
strate that today’s