It strikes me as an analyst in the space that energy procurement activities at large industrials and other energy-intensive firms are overdue a specific solution. Yes, they could use an ETRM – though that would be overkill in many respects, or they can use a combination of forecasting, optimization and other tools or even rely on spreadsheets. But, in an era of high prices and high volatilities, higher cost of credit and so on, those with significant energy expenses are probably better with a robust and specific solution.
Recently, I was contacted by a firm that has ended up providing exactly that sort of solution. Thomas Oriol is a director with Datapred and he was keen to give me some information and a demonstration of its software. Available in the cloud as SaaS and priced to be affordable on a monthly subscription basis, its application certainly seems to have much of what is needed in this context. He told me that Datapred got started in 2017 and is based in Switzerland, but with an office in Paris. It already has twenty customers using various aspects of its solution and sees those customers originating from a variety of segments like larger energy intensive industrials, SME’s that have become more conscious of energy costs and energy brokers and advisors. Historically, most of these entities used Excel or some other non-application solution. However, as prices and volatilities have increased dramatically, some have sought more secure, less risky, and more robust tools like that offered by Datapred according to Thomas.
The solution includes several modules that can be taken stand-alone or combined. These include a reporting module, which essentially allows the user to enter various purchases of energy (European natural gas, power and EU allowances are currently supported). Thomas says that these can include listed futures, spot deals as well as custom transactions like OTC or PPAs. The module also provides position and P/L as various reports sliced and diced in ways beneficial to the user and is linked directly into various European markets.
The market module allows analysis and forecasting, and Thomas says that reporting can be done factory by factory, country by country etc., and rolled up to an enterprise level. Here buyers can look at projected energy prices and gain insights into how they procure energy. It also includes a tool it has named the ‘buyometer’ that aids in recommending procurement strategies depending on criteria entered such as risk profile and so on. The buyer can visualize price drivers and what if type market scenarios as well.
The decisions module allows buyers to benchmark potential procurement or hedging strategies and look at various options and scenarios. Thomas demonstrated an example of whether to use calendar or quarterly options, for example. This module can be used in a multiplicity of ways to help quickly and easily to make decisions, he told me. Datapred’s differentiator according to Thomas is the underlying engine. “The underlying technology is unique and combines time series analysis with optimization algorithms in a proprietary modelling engine that we built,” he told me.
There is certainly a market for such a solution and Datapred seems to have a bit of a head start in some ways although there are other potential solutions on the market. At the end of the day though, Thomas was adamant that the real competition is Excel and a reluctance at times to adopt a new tool. Given current market conditions, Excel is surely no longer a viable option?