Trends in European Power
An interview with Scott Hestenes, Head of Energy Sales, Brady plc
ComTech Advisory: European energy markets are in an almost constant state of flux due to the energy transition, increased interest in intra‐day trading, and many other structural and procedural changes. Under such circumstances, what role can digitalization play in the markets?
Scott Hestenes: Initially, when the markets first opened-up in the early 1990’s, market participants completed weekly planning and scheduling, using rudimentary forecasting and analysis tools. We even had weekly definitions built into our systems for setting up weekly profiles. Next, the market transitioned towards day-ahead planning and scheduling, with the day-ahead market being the spot market, setting the market reference price for the financial trading. Today, we’re seeing the next step change, intra-day markets are capturing more and more liquidity signalling market operations are shifting granularity, coming ever closer to real-time. In addition, when we look at the balancing and frequency markets, there is also a drive towards interfacing trading systems with SCADA systems for supporting managing assets through electronic activation of accepted bids.
My point being above is that there is a whole range of factors and changes happening including; advances in forecasting and analysis applications, market consolidations, competitive NEMO market operators, requirements for electronic activation of physical assets, etc… Digitalization in the form of advanced system support with seamless integrations across multiple applications is the only way in which market participants will be able to process all of the data quickly enough and stay competitive.
Without having digitalization as part of your core company strategy with an investment plan and roadmap for securing efficient market operations, you will be left behind ….
ComTech Advisory: Brady’s physical energy products cover the entire gamut of entities in the power markets from utilities to retailers to some degree. Can you provide a succinct description of the breadth and scope of coverage?
Scott Hestenes: The Brady physical energy platform is one which supports physical trading on short-term markets (day-ahead/Intraday) as well as balancing markets. Our software suite includes powerful energy data management tools for calculations and meter data management with extensive back-office functions for settlement and invoicing.
- The core platform has multiple market connections delivering pan-European coverage of the two main exchanges Nord Pool and EPEX, as well as being made ready for further emerging markets. In addition, it has an extensive number of TSO connectors, supporting pan-European scheduling for the majority of European countries.
- Brady’s physical energy suite is largely based upon time-series management concept. This is the means for handling large volumes of data and the basis for configuring calculations. This enables the platform to configure a complex framework of advanced calculations, automating many functions, thereby delivering significant efficiency gains. Often as such, this platform becomes the central system of record for trading operations.
- The system also automates the collection of meter data used in settlement and invoicing.
- With its support for managing complex data and calculation frameworks as time-series, Brady’s energy software suite delivers tremendous benefits in the form of scalability and flexibility.
ComTech Advisory: Brady’s power industry customers also reflect that range of functionality and are spread around the world, but which markets do Brady see Brady physical trading having real applicability?
Scott Hestenes: Our heritage comes from the Nordics where we have an exceptionally strong footprint. With over 30 years experience in energy, we have been at the forefront of exchange market design, helping to develop the operations for the first power exchange in Europe. In addition to our understanding of the Nordic market, Brady also has a strong heritage across central Europe. For decades we have successfully delivered a pan-European solution to customers trading in Central Europe. Outside of Europe, Brady has customers operating our physical platform for the Ontario power market in Canada.
Our platform has the flexibility to expand its current footprint, following the exciting investments into our products as a result of the recent Hannover acquisition, it is Brady’s intention to consolidate our European positioning and leverage this for looking at further core geographic market expansion.
ComTech Advisory: ComTech has seen emerging solutions coming to market around optimizing specific assets like wind farms or batteries using AI and ML, for example. Does Brady have solutions to offer in that emerging market?
Scott Hestenes: Asset optimisation is not a core functionality within our suite, however the critical data managed within our energy suite can be integrated with key systems at customer operations to create an ecosystem of best of breed solutions, making optimisation possible. Our strength is our connectivity and we see this is a critical ingredient in forward thinking software solutions today. We have a comprehensive communications layer, able to handle time-series and over 300 different message types. Whether it is connecting with optimising tools or AI solutions, we are able to help customers meet their current and future technical landscape requirements.
ComTech Advisory: When it comes to data management in physical power markets, what are the key requirements and why?
Scott Hestenes: In going back to the drive towards real-time data management and the fact data volumes are incrementally growing, I would say the key data management requirement is for automation. As an example imagine the vast resource and time required to manage administration processes for capturing meter point parameters such as power consumption, power production, metering data estimation and validation. All of which can be effortlessly captured, reported on and added into workflows for automated billing and settlement within specialised physical power trading solutions such as Brady’s system. Additionally, physical power markets require the ability to meet tight time frames and have fast reaction to changing factors. As an example, the new mFRR energy activation market (2022-2023) requires response times from activation to actually ramping up/down production to be just a few minutes. Time series data management, automated calculations and robust workflows are critical necessities in achieving these challenging deadlines.
Looking at the current landscape of systems and vendors, the monolithic approach is no longer an optimal one. Upgrade timescales are slower, testing resources greater and maintenance costs higher, meaning systems cannot be as nimble or cost effective to both market changes and moving customer requirements.
Our view is that companies should review key processes, measure them up against a best of breed strategy, and devise a strong integration strategy to consolidate the main systems supporting core data flows to create optimal business process support.
ComTech Advisory: In looking at where power markets are going, particularly in Europe, what does the Brady crystal ball suggest and what is Brady doing to prepare?
Scott Hestenes: The direction of travel for power markets in Europe is for increased integration across national borders. Currently European power markets have more or less a 1-to-1 mapping between country power grids and country specific capacity, ancillary services, day ahead and intraday markets. More and more we are seeing projects to integrate these individual country markets to create much wider cross European or sub-regional marketplaces.
Brady sees the European energy markets moving away from individual European country exchanges to wider market areas like the ISO/PJM markets in North America. This will initially occur with the short-term power and electricity services market in the next 5 to 10 years to be followed by futures markets offerings covering these new wider regions rather than individual countries.
We believe close engagement with customers is essential in understanding how market changes impact their processes. We commit to frequent user council meetings in addition to a busy timetable of customer webinars and an annual Energy User Summit, so that we can remain connected and in sync with all of our energy customers.
Brady is continuously keeping abreast of the European market’s evolution and adapting our solutions to allow our current and future customers to seamlessly take advantage of this growth in market size and complexity.
About Scott Hestenes, Head of Energy Sales, Brady plc
Scott Hestenes, Head of energy Sales, Brady plc. Scott has over 25 years’ experience in working in energy, having been part of the industry since the early days of deregulation. Scott has worked for Brady since the acquisition of Navita in 2012. Previously to this, he started his career working for a spin-off business Hand-El Skandinavia in the mid 1990’s, transitioning into OM Group a larger international corporation in 1998, then back to the smaller expansion business Navita in 2004, Scott being one of the co-founders. During all these years, Scott has witnessed at first hand the creation of energy markets in the Nordics, across Europe and in other parts of the world, Scott has deep industry expertise.
During his time at Brady, Scott has worked closely with many of the blue-chip leaders as well as smaller players and start-ups with the European energy markets. Previous roles have included Head of Operations EDM physical trading and settlement as well as Senior OpsBoard Member. Scott manages Brady’s energy sales strategy and account management, continuing to work closely with and support customers post sale. Following Brady’s acquisition by Hanover Investors and agreed product investment strategy, Scott will be integral in product enhancement projects focusing on Brady’s short term power trading software solutions.
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