Comprehensive automation for the energy trading of the future (Opinion piece from Johannes Püller in EUROFORUM Conference Newsletter May 3, 2018)
Against a backdrop of progressive digitisation, the energy industry has been undergoing a fundamental structural change for several years now. The future of the industry will be defined by increasing electrification, automation and small-scale networking.
At the same time, energy trading faces new challenges. These result from the expansion of renewable energies and the involvement of market partners and consumers, some of whom also act as producers and traders. Only those companies that recognise the opportunities of digitisation and automation and use them consistently will be able to count on long-term success.
Three important trends are currently dominating and transforming energy trading:
- Increased use of renewable energy – flexibility is thus increasingly important
- growing electrification of mobility
- rising numbers of market participants – causing increased complexity.
Trading power from renewable energy has become so fast and complex that it is barely feasible without automation. Electromobility and the expected new market participants are pushing change even further. In the future, many decentralised production and consumption facilities will need to be managed through a centralised or decentralised IT system. In this way, energy trading will become even more short-term, more complex and more granular than it is today.
A simple example makes this clear: assume each of the ten occupants on a street has an electric vehicle. If all of them charge up at the same time, up to 1.5 MW peak power will be drawn from the grid. The result: without automation the street will experience a blackout. This example shows that grid operators of the future will have to take on a much more active role. It won’t be practical to keep increasing grid capacity.
Intelligent IT systems are needed to control supply and demand from both the production side and the grid. Thus, it must be expensive to quickly charge an electric vehicle on demand when the sun isn’t shining and the wind isn’t blowing. Likewise, on a sunny, windy day when no one else is charging, charging must be correspondingly affordable. Consumers don’t want to try to understand complex market mechanisms – they want to charge their cars and drive. So IT systems will have to take over these tasks. Whether they will use the much-hyped Blockchain technology or other distributed or centralised systems remains to be seen.
Need for action from politicians and regulators
Naturally politicians and regulators must step up to create a framework to make such developments possible. Today, grid prices are regulated – logically so, due to the natural monopoly of the grid operator.
However, this approach in its current form will not be sufficient in the future – for example due to the growth of electromobility. Because why should a regular user of public transportation pay for grid improvements to support the infrastructure needs of a Tesla driver?
So how do we address the challenges that come with electromobility? In the future, will every electric vehicle become its own energy trader? Can every homeowner produce, store and sell electricity – taking on all roles in the energy industry and actively taking part? From a purely technical perspective this is possible, because in automated energy trading it doesn’t really matter how granular the transactions are. It is rather a question of energy companies’ desire and ability to innovate. Will they define these developments themselves, or will game changers come in and completely shake up the market, as in many other industries? And naturally it is also a question of how politicians respond to and orchestrate these developments.
Digitalisation, Blockchain, big data, personalisation, IT security – all these technology themes will or may play a role in the future. Will Blockchain actually be implemented so that, for instance, every electric car is its own energy trader? Could be. But there are countless other technical options that are more proven and resource-efficient than energy-intensive Blockchain solutions.
In spite of all the obstacles and uncertainty, it is clear that the energy industry, and with it energy trading, is at the threshold of major change – and not just of a technological nature. Energy companies need to act quickly and align their business processes on the new circumstances. Because the danger that fast, innovative game changers recognise the opportunity and turn the industry on its head is real and must be taken seriously.
Johannes Püller, Co-Founder, VisoTech
Opinion piece published in: EUROFORUM Conference Newsletter “Balancing Energy Market & Intraday Trading” May 3, 2018; © 2018 EUROFORUM. EUROFORUM Deutschland GmbH, Düsseldorf.
You can also see the original article (in German) on the EUROFORUM website.
About the EUROFORUM Conference “Balancing Energy & Intraday Trading”
As an event organiser, EUROFORUM engages proven experts from business, science and politics and creates forums for knowledge transfer and exchange of views. High-quality conferences, seminars and conventions highlight the latest trends and provide up-to-date information for practical business management. In addition, executives make valuable contacts with industry decision-makers.
The conference “Balancing Energy & Intraday Trading” June 18-20, 2018, in Berlin is focused on important topics in the energy business, such as
- Regulatory legal framework at national and European level
- The sensible marketing of flexibilities – the integration of short-term markets
- International markets: how are flexibilities traded?
- Innovative technologies and electricity storage as market participants
- Redispatch and EinsMan: causes, costs, market prices
- Participation in intraday trading: Under what conditions is it worthwhile?
- Mega Trend Algo-Trading: Opportunities offered by trading automation
As the supplier of Europe’s leading software solution for fully automated power and gas spot trading, we have been invited to deliver the pre-conference workshop June 18 on intraday trading, as well as a presentation on algo-trading. In the workshop “Unlocking new opportunities in intraday trading“, our team along with other industry experts will provide an overview of intraday markets and a look into algorithmic trading. On June 20 at 2:00 pm, VisoTech Co-Founder Johannes Püller will also give a presentation on the subject of “Algorithmic trading – make or buy?”.