We recently attended the European Energy Risk Summit in London, England. The main themes of the summit were the effects of the new market regulations in Europe (particularly EMIR and REMIT) and the impact and speed of change in technologies and data.
Many of the key points raised by the speakers revolved around the disconnect between the original objectives of introducing new regulations and the regulations’ actual outcomes. The new regulations being introduced for the energy markets in Europe followed a natural progression from the introduction of regulation in finance, Basle 3 (worldwide), and then MIFID (EU).
The most identifiable impact of the regulations brought in to date (be it Dodd-Frank in the U.S. and the current regulations in Europe), is higher overall costs, higher IT costs, less market participants, and less liquidity – or a combination of all of them. The biggest benefit being the increased transparency.
The most discussed concerns of the speakers at the summit were that the new environment would reduce the appetite of market participants to want to invest for the future and that the overall cost of energy to consumers will simply increase.
The effects of technology and data in energy trading and risk management included the speed of change and the opportunities that new technologies and increased access to the vast array of data that is out there provide. New technologies (like Twitter, mini drones, and satellites) are now making it easier to access and process data in ways that didn’t exist even 10 years ago.
A constant need for trading organizations is to manage mature existing system expectations against the constantly changing business environment and its demands – “closing the business capability gap.” This is typically something that Microsoft Excel is used to close. We discussed the future of this system and it was suggested that there will be a growth in shadow IT structures in organizations that will blur the line between “office” and “formal application systems” to be able to deliver solutions faster.
In many cases, it seems that the issue of finding data isn’t always the problem. This data has often been there all along within an organization and is constantly being collected, but the data isn’t being utilized strategically. Key points about this issue were discussed as well, and the general conclusion was that there is a need for organizations to stop being passive consumers of data and instead coherent data acquisition strategies that create durable competitive advantage should become a management priority. Companies themselves need to make the effort to invest the time, money, and energy needed to manage this data in order to maintain an advantage.
At ZE, our enterprise data management, analysis, and integration software solution, the ZEMA Suite, has been built to offer companies an end-to-end business solution for energy companies with all of these above data issues. Book a complimentary demo to find out how ZEMA can help your company.