The recent upsurge in new market data for electricity markets outside of the US looks like it could be one to watch.
Ever since deregulation of electricity markets first happened in the mid-nineties, it’s been fascinating to see how the marketplace has evolved in the US; not least with the introduction of hundreds of thousands of granular data feeds into the system each day.
The same is now happening beyond US shorelines. We’re currently seeing an explosion of data across countries as their markets develop and trading activities increase.
So it came as a bit of surprise when I tried looking around for some information on this on the web and came up short. Is it the case that it’s flying a little under the radar of the industry right now?
Data, Data, Data … the US and beyond
The US itself, as we know, is relatively well-developed in terms of its market structure and available market data. Much of the industry’s attention right now is squarely focused on ensuring that data is clean and accurate so market players can maintain they’re in compliance with state regulations.
However this is not to say that market players have taken their eye off the ever constant stream of new data sources and reports becoming available. For example more and more renewable energy generators are being built (and because of this so too are new gas generators to back them up), ensuring there will be no give on the abundance of new data coming on-stream.
It might be fair to say so that market players in the US have become highly experienced over time when it comes to dealing with the complexities of data in the marketplace.
However go further south into Latin America to countries like Colombia and Guatemala. Markets there have been deregulated for some time now, and in the case of Guatemala longer than the US. Despite this, it can be argued that market players there do not have the same level of experience because large state-owned, top down monopolies have maintained control over the market up until very recently.
In the past five years or so we’ve started to see these monopolies loosen their grip. We’re now seeing a tide of new independent system operators coming on stream, as a plethora of new data points get added to the mix. With so many new locations and prices, many utility companies are now deciding where they want to sell.
Replicating the US Market System
I work with a company that has developed an end-to-end enterprise data management solution that manages energy and commodities market data. We offer clients access to an extensive global market data library that can be validated and used for building forward curves.
In the past year alone, we’ve seen a significant rise in the number of public and private organizations outside of the US seeking our services.
What we’ve noticed in the past year is that many of the organizations coming to us are asking us what data they should be collecting. Some say they are interested in replicating what their peers in the US are doing in terms of managing their data. Their problem … they don’t exactly know how to do it.
As well as this, in these evolving markets places big and small players alike need to have equal access to data in order to be effective market participants. Governments in these countries have a responsibility for making this data available in an equitable way.
Avoiding The Data Mess
My colleague Yi-Jeng Huang, a Business Analyst based in our office in Singapore, believes market players will need to get a handle on the data they’re using for electricity markets in Asia Pacific and Africa, as well those in Latin America.
Even in China – where a system of state-owned enterprises means it’s very unlikely we’ll see a push for deregulation –they must still participate and use data as other market players do when purchasing from the open power market.
I personally think the rise of data for electricity markets will be one to watch in the coming months and years. Just how well market players in different countries come to terms with it will surely be a measure of those that will succeed and prosper and those who will fail.