Energy Trading v2.0

By: Bank of baroda
Mon Sep 28, 2020
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Energy is omnipresent. Think of any engine or machine, it requires energy to manufacture and to function — right from phones and computers, to the lights and appliances at home. With rising living standards and a growing number of consumers enjoying the fruits of economic progress, demand for energy keeps going up. As per DHL estimates, energy demand will rise by more than 30% by 2035


Today, numerous geographies in the world suffer from a lack of energy supply. Almost all countries in the world cannot generate the required energy with their own resources. Hence, multiple energy trading exchanges have been set up to fulfil the unmet demand. Energy exchanges enable utilities to sell surplus power to consumers and distribution companies. There are numerous energy exchanges in Europe and some of the most popular are the NORDPOOL in Norway and the European Energy Exchange (EEX) in Germany


Energy exchanges offer numerous benefits. For instance, Indian Energy Exchange helps utilities buy and sell power just an hour before the requirement. Its platform enables consumers, including distribution companies (discoms) and captive users, to buy power on exchanges just an hour before delivery.

Artificial Intelligence (AI) and Robotic Process Automation (RPA) are expected to transform the energy trading landscape. RPA and AI are already adding value today, with companies actively replacing repetitive, process-oriented tasks. As per Greysoft, RPA can reduce processing times by about 50 percent while saving millions of dollars in operating expenditure.

According to industry experts, several market participants, such as Statkraft AS, EnBW AG, Axpo AG, are already using partially automated tools for energy trading. Some of these tools complement the market data provided by official exchanges like EEX, whilst others also provide suggestions for conducting trades.

In contrast, there is now a new generation of auto-traders which can trade by themselves on the exchange using conditions pre-defined by the user. Some of these products trade directly on the market based on the planned power plant usage administered in the system. Thus, open positions can be closed at low prices and the power plant can be controlled according to the market situation.

Though automation is on the rise, we believe that automated trading in the energy industry requires more than a set of algorithms. It needs trading platforms to integrate complex IT infrastructures and diverse communication processes and then monitor and keep them running around the clock. These platforms can then, become a basis for the upcoming fully digitised business models in energy trading

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