“Interconnectivity is vital for the energy industry” -despite so- called Brexit, “energy markets will be closer”
These were the words of conference keynote but to be honest, you could have felt the sentiment in the room – 8 years of ETOT community and collectivism do not fade so easily.
ETOT opened in typical fashion with an overview of energy markets from the CEO of London Energy Brokers Association – among his findings were that the energy market in Europe is currently dominated by oil and LNG trading. He then touched on a few updates on renewables and, of course, regulation. One of the notable remarks was that REMIT and the Third Energy Package have reduced the advantages of being vertically integrated and have empowered hubs and network dynamics.
Following was a much-anticipated panel discussion addressing communications between IT and back office departments. A lively exchange between dept. heads at Uniper and Edison where one of the problems identified was that the two depts. have common reference points but different meanings for them – so in a sense, they are “semantically shifted”. Solutions ranged from co-locating the departments to centralising decision makers between them.
In the afternoon, Dr Peter Schaeren (BO Head, Axpo) lived up to his reputation as one of ETOT’s most popular speakers with a session on preparing ops for the future. What is the future you say? Automation; It really was that simple – he even likened the future operations professional to that of a modern day air-pilot.
EFET then took to the stage again – this time to talk big data in the context of regulations. Some highlights include the opportunities it offers in generation (modelling of renewables data and energy supply, optimisation of asset management), trading (standardisation, KYC with all customers as traders) and even customer behaviour.
A highly-relevant talk on cross-company cost-cutting projects from the MD of consultancy firm Plantinion was next. One of the most common starting points supposedly a matured IT architecture and high complexity/costs with not the necessary BO support. Also interesting was their diagram of where cost-leeching problems can hide in seemingly insignificant areas of every department. They finished with outsourcing and the importance of standardisation required to “unleash potential”.
Trade surveillance greeted attendees next as a panel of four mulled over the behavioural characteristics of an individual right up to that of an entire culture. The panel agreed quickly on compliance being everyone’s responsibility in the company and that all initiatives must come from the top. Credit Suisse got the audience to think about what makes a “good person do bad things” and challenged them to think what they would do had they been given too much change. In fairness, what leads people to “abuse” the market is not wholly different.
From this point on, the group split into two: technology and operations. Whilst tech folk went to learn about cloud/big data technologies and how to “green” an energy portfolio; ops people stayed to hear about cash management, risk-management and the clearing landscape. Notable snippets were seeing what lead EDF Luminus to a €600 million investment in renewables and a convincing case as to why cash management should be a back office responsibility.
ETOT 2016 ended with a couple of intriguing technology cases. First up was a detailed account of how Endesa successfully moved to the cloud. Despite rapid advances in cloud technology penetration, a minority in the audience could say that their current applications were cloud based (although most of them imagined to be on the cloud in 3 years).
Closing the event was some light shed on the enigmatic “blockchain” and how it can be implemented using real examples – courtesy of the Advisory House and RWE. Yes, there is definitely hype surrounding this new phenomenon but what mostly added weight to the concept was when they pinpointed where the need lies for it. To put it simply, almost every stage of OTC trade lifecycle is digital bar one – settlements. And it is here that, through increased process automation, regulatory and legal transparency, reduced risk and costs that blockchain (according to the World Economic Forum), in less than 10 years, will store 10% of global GDP.
Naturally, there is much, much, more to share from this year’s ETOT. We’re glad to once again have welcomed a packed theatre of energy trading professionals who all contributed to insightful discussions chronicling the year. We only hope to welcome them (and you!) back in 2017 where once again ETOT will be primed to face the latest challenges head on (for the 9th time!).
In the meantime, why not check in our sister events Energy Trading Regulations and Compliance or ComRisk both taking place in early 2017 in London?