White Papers Responding To Continual Energy Market Change | Page 5

Responding To Continual Energy Market Change

A ComTechAdvisory Whitepaper

OTHER DRIVERS
As if this were not enough, companies engaged in European energy must also comply with an increasingly
aggressive regulatory environment that includes trade reporting to multiple jurisdictions, an increased emphasis
on risk management (including operational risks via confirmation matching and so on), trade surveillance, transparency and possibly in the future, capital adequacy testing. Stakeholders are also demanding increased transparency. All of this simply adds further complexity and cost into the equation of change.

Many of the companies operating in European energy markets actually produce, sell, trade or buy multiple commodities
including electric power, natural gas, LNG, lignite, various
biofuels such as wood chips, and emissions certificates. They
are essentially multi-commodity concerns and each additional
commodity is impacted in various ways by the changes in the
structure and operation of the market adding further overall
complexity and cost.

Perhaps it should be no surprise that many utilities in the
European energy industry are struggling to be profitable as
costs increase across the board and yet prices have declined
and in some instances, moved into negative figures! As a result, they face increased scrutiny from stakeholders and find
it harder and more costly to obtain financing and investment.

SYSTEMS IMPACT
The biggest requirement in European energy from a systems perspective is to provide the business agility and
flexibility and allow them to respond to such changes. Survival in an era of increased costs and lower energy prices simply means that all have to increase efficiency and focus on protecting margins. Essentially, critical systems
like ETRM and related software need to have built-in flexibility to cater for both disruptive changes and the evolving
user needs. They need to be supplied by vendors that are committed to delivering the required functionality within
a cost and delivery structure that works for the new dynamics of the industry. The vendor needs to be reputable,
experienced, knowledgeable and committed to partnering with its users through the waves of change being experienced across the industry.

All European energy companies need to continually review
their short to medium-term goals to ensure that they have the
flexibility required. Additionally, they need to constantly review
their systems needs and suppliers to ensure that they too can
deliver flexibility and reliability while supporting the business.
In a world where energy has moved from a stable longer-term
horizon to a faster paced renewables market, the significance

of timely and accurate positions and the ability to trade at low
granularity is critical to the responsiveness of the business.
Trading companies need to ensure that their systems and processes are capable of meeting these requirements and if not,
look to the ETRM solutions currently available on the market
that will allow them to achieve this.

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