The collapse in wholesale energy prices, which began in earnest mid-year 2014, has resulted in a prolonged period of declining profits, declining trading volumes, bankruptcies in the up-stream markets, and a general malaise in the global wholesale energy markets. Though low prices are a benefit for consumers, this period has been extremely challenging for many in the energy industry, particularly those that produce and trade energy commodities.
Though oil prices have recently begun to rise off their 13 year low set in January of 2016, other energy commodity prices, such as power and natural gas, continue to be moribund – in a persistent oversupplied condition and with unpredictable volatilities. Given these conditions, Commodity Technology Advisory, with the support and coordination of study sponsors FIS and Capco, sought to examine the impact on the usefulness, utility, and capabilities of Energy Trading and Risk Management (ETRM) systems to improve financial performance and profitability, mitigate risks, and help find market opportunity for companies that operate in this difficult market.
This new research looks at the impacts and implications of low-priced energy commodities as they relate to the key technologies used to trade, manage, value and account for those trades. These ETRM systems, though vital to the industry, will vary in their utility and value among users depending on the scope, scale and age of those systems. While not seeking to quantify these potential differences, we did want to examine the implications of the current low price environment on the value and usefulness market participants assign to those systems and understand the impacts on those technology users as this low price condition persists.
Read more by downloading ETRM in a Low Commodity Price Environment