Setting up a UK Electricity Trading Desk

The decision whether to set up an electricity trading desk faces many asset owners or flexibility providers. With many smaller assets and volatile markets the decision can be quite daunting with the perception that it is extremely complex and costly. Many participants and new entrants prefer to outsource their trading activities to existing service providers comfortable in the knowledge that the lost revenue opportunity out ways the complexities and overheads of running an internal trading desk.

However the set up costs are likely to be less than perceived and the financial benefits higher than imagined. A new entrant with a small portfolio will often outsource their trading activity and forget about it while their portfolio grows and those benefits remain unrealised (apart from in the bank balances of the service providers!).

In a world of distributed assets a portfolio of six or more assets of around 7MW each would justify the set up and running costs of a trading desk.

Key to a decision to in source power trading is the complexity of selecting the various software systems required and their integration. This alone is often a decisive factor in the decision to outsource a trading desk. Added to this is the recruitment of traders and the organisation of 24x7 shift desks.

The Electricity Trading Desk Jigsaw

The systems required to set up a trading desk fall into the following categories:

  • Market Entry – software to support Supplier Volume Allocation (SVA), Central Volume Allocation (CVA) and/or Virtual Lead Party (VLP) flows with Elexon
  • Software to communicate with the National Grid ESO Balancing Mechanism (BM) through EDT and EDL via fixed line or Wider Access protocols and the Platform for Ancillary Services (PAS) for frequency auctions.
  • Software to monitor and optimise traded position, interact with the day-ahead and intraday markets (EPEX) and schedule assets in the most profitable manner
  • Control system software to physically instruct and monitor the assets and provide operational metering data to the National Grid data concentrator
  • Energy Trading and Risk Management (ETRM) software to manage trades, conduct over the counter trades and manage risk
  • Either internal MI or customer dashboards to understand revenue and cost by asset across the full revenue stack and provide customised views of asset performance for service provider’s asset owners

Enegen, together with its partner network, complete the trading jigsaw with a suite of market leading established, integrated software products. This removes the overhead of complex integration projects and greatly reduces the time to market, cost and inherent risk of software system integrations.

  • Genstar4 is a comprehensive market interface software solution covering trade notification to Elexon, BMU (asset) dispatch through EDT and EDL with National Grid ESO, notification of delivered volumes to the SVAA for VLPs and fully reconciled settlement of Elexon SAA flows. Genstar4 will also support interactions with PAS.
  • Atom is a hierarchical scheduling and trade optimisation system which will allocate trades and BM instructions across individual assets, aggregated asset groups or BMUs based on optimal profitability and produce schedules for control system delivery and physical notification via Genstar4. Atom is an algorithmic trading solution which interacts with the day-ahead and intraday markets (EPEX) to trade availability and optimise position based on market prices.
  • Nebula is a powerful data portal delivering insight into asset commercial performance with a full breakdown of income and profitability based on the revenue stack and underling costs (SRMC) across time with drill downs from monthly to daily and even period level analysis.

The key benefit for a trader is that despite the evolution of many more distributed flexible assets to achieve the same MW as traditional portfolios, the Enegen and partner platform removes the directly proportional relationship of an increase in personnel to trade them by using automation and algorithms wherever possible ensuring that traders are focussed on the market and key trading decisions.

All Enegen software systems are natively integrated and the Enegen partner ecosystem completes the jigsaw covering market entry software and services, control system software and ETRM systems. These systems are fully integrated with Enegen products. If you already have a piece of the trading desk jigsaw, this can easily be incorporated through a library of published APIs.

Enegen can provide a fully costed solution including resourcing costs and desk setup together with analysis of the return on investment for the setup and operation of the trading desk. Enegen also provides expert consultancy to establish your trading desk or work alongside third-party business consultants to implement a turnkey solution.

Speak to an Enegen Consultant to explore whether an in-house trading desk is the right choice for your operations.

Follow this link for further details about Genstar4 trading and dispatch software.

Follow this link for further details about Atom position monitoring, asset scheduling and trade optimisation software.

Follow this link for further details about the Quasar Balancing Mechanism reporting and forecasting service.

Follow this link for further details about Nebula asset revenue analysis software.

Contact Us to learn more about Enegen’s products and partner network.

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