Powering through tough times
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Hitachi ABB Power Grids’ dominant position in Energy Risk’s 2021 Software Rankings reflects its deep understanding of current market challenges
In recent months, energy firms have faced some of the most extreme supply and demand shocks ever seen – from national lockdowns caused by the global Covid-19 pandemic, to the Texas freeze in February 2021. Additionally, electricity market participants were already contending with the challenges posed by ever-increasing renewables in the generation mix. These events tested even the most robust commodity/energy trading and risk management (C/ETRM) software systems, as firms grappled to track commodities and understand their full market and credit risk exposures.
Energy Risk’s annual Software Rankings survey reveals the commodities software systems that were considered the most proficient across a variety of different areas in the commodities landscape during the tumultuous period of 2020 into 2021. One firm that ranked consistently highly across the survey was Hitachi ABB Power Grids. The firm gained numerous first and second places in the derivatives software, physical trading software, front- and middle-office functionality, and enterprise risk software sections.
Given the high levels of volatility in many markets recently and the shift to short-term and intraday trading, market participants need to be able to track positions and risk exposures in real time – not only to monitor risk but also to trade opportunistically.
“Volatility and shorter-term trading give traders increased opportunities but, at the same time, greater risk exposure,” says Uday Baral, global head of energy portfolio management at Hitachi ABB Power Grids. “The good news is that, with an integrated C/ETRM system, they can engage in sophisticated energy contracting and trading transactions to serve their load efficiently, profitably and in a balanced fashion on a near real-time basis.”
In the 2021 Software Rankings, Hitachi ABB Power Grids took first place in many of the categories within front- and middle-office functionalities, including pre-trade analytics, portfolio optimisation, position management, credit risk, the three market risk functionalities and best cloud-based software. It was also strong in the hugely important area of regulatory compliance.
“Hitachi ABB Power Grids is committed to developing and updating the tools needed by electricity traders to address the many challenges posed by renewables and the energy transition”
Uday Baral, Hitachi ABB Power Grids
“The increase in trade volumes, combined with regulator reporting requirements in wholesale and derivative markets, has compelled market participants to implement a front-to-back integrated C/ETRM solution in order to create a ‘single version of the truth’ with all data required for regulatory reporting,” says Baral. “Hitachi ABB Power Grids’ TRMTracker system has built-in reporting capabilities for many financial regulations, including Regulation on Wholesale Energy Market Integrity and Transparency (Remit), European Market Infrastructure Regulation (Emir) and the revised Markets in Financial Instruments Directive (Mifid II).
“Hitachi ABB Power Grids gained first places for gas and power in both the derivatives software and physical software sections as well as coming first in scheduling, operations software and emissions. Its success across the electricity rankings reflects the firm’s deep understanding of this evolving marketplace,” says Baral.
“Last year, for the first time, renewables generated more electricity than fossil fuels in the European Union, leaving traders facing, more than ever, the challenges posed by intermittency,” he notes.
“Renewable generation is less predictable, which introduces volatility, rapidly changing market positions, and decisions based on multiple information sources,” he says.
Additionally, decarbonisation efforts are driving demand for tradable certificates, such as Guarantees of Origin/Renewable Energy Certificates, to offset CO2 emissions. A growing market in green certificates provides further complexity that needs to be captured, tracked and integrated in C/ETRM systems.
“Hitachi ABB Power Grids is committed to developing and updating the tools needed by electricity traders to address the many challenges posed by renewables and the energy transition,” says Baral. “Hitachi ABB Power Grids is uniquely positioned to help manage these issues,” he says. “This environment can only be successfully navigated with a live, real-time system with automated market connections. Relying on traditional end-of-day processes is just not good enough.”
As well as serving its clients through this tumultuous time, Hitachi ABB Power Grids had an eventful year itself with the acquisition of C/ETRM software stalwart Pioneer Solutions.
“The acquisition of Pioneer Solutions in late 2020 makes Hitachi ABB Power Grids’ Energy Portfolio Management offering the most comprehensive in the market,” says Baral. “I’m excited to see Pioneer’s robust industry-leading C/ETRM solutions amplified by Hitachi ABB Power Grids’ extensive global footprint and scale.”
As energy merchants and traders continue to navigate rapidly changing commodity markets worldwide, Baral believes Hitachi ABB Power Grids is well positioned to provide them with the critical tools they need. “We strive to be the partner of choice for customers looking to support a sustainable energy future while managing market risks,” he says.
The Software Rankings
Energy Risk’s Software Rankings survey is now in its 17th year. In this poll, participants voted for their preferred software vendors and applications, data providers, data management firms and implementation specialists.
The poll, which was open from February 1 to March 5, 2021, covers commodity trading and risk management (CTRM) systems, enterprise risk systems, derivatives software, logistics technology and trading platforms.
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