Enuit Increases Focus on Environmentals
I recently spoke with Seenu Kaliamurthy, Enuit’s Managing Director of Power Solutions, to get an update on the company’s efforts in the environmentals space, which encompasses low carbon trading, carbon offsets, and credits (including RINs, LCFS, RECs, RGGIs, CCA, EUA, GoO etc.,). As ESG continues to gain momentum, there is no doubt the ability to manage those environmental products will become an increasingly important capability in ETRM/CTRM systems.
As Mr. Kaliamurthy said, “The enviromentals markets are large now, but with increasing capital coming in to support renewable energy projects – those that produce emissions offsets – there really seems to be no limit on how large these markets can grow.” However, he did note that market growth will depend on standardization and structuring of many of these emerging products, but the increasing number of environmental registries is helping to address that issue.
As he noted, most CTRM systems have some basic capabilities in handling these products, but there are subtle differences among those currently available. In particular, valuations can be difficult given that these products do have expiration dates and many offsets require layered price curves to accurately value them, a capability he notes that Enuit’s CTRM system, Entrade, provides. And, for systems used by producers that generate credits, or by traders, the ability to manage the full lifecycle of these instruments from production, registration, valuation, inventory valuation & reconciliation, settlements and accounting is critical. All environmental products require registration when created or traded, and tracking the certificate numbers can be difficult and cumbersome. Mr. Kaliamurthy stated that Entrade mirrors the various environmental registries, helping to ensure proper tracking and management of certificates.
On the product front, he noted that Enuit has been highly focused on these markets and is seeing significant inbound interest, particularly from biofuel manufacturers and renewable natural gas producers. In fact, in terms of renewable or “green” natural gas, they currently have a customer using the system to track environmental credits generated by gas produced from multiple digester plants using animal waste. As he points out, some of the complexities of that market are very similar to conventional gas production, such as having shared ownership interests in the natural gas produced. However, there are other required capabilities that have to be addressed within the CTRM system, such as the ability of the system to calculate credits generated and allocate those credits among the facilities’ partners.
Enuit’s focus on the environmentals market, combined with ongoing technology updates (including their move to a fully web-based cloud-native solution) and dedicated capabilities such as an environmentals delivery module, appear to be paying off for the company. Given their recent successes in that market, plus the future growth potential for environmental products in this era of ESG, we do expect Enuit to continue to perform well in that market in the future.
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