Reimagining Energy Supply, Trading & Risk Management for Power & Utilities

Create a Data-Centric Digital Ecosystem Across Supply, Trading, and Risk

Unlock value by increasing agility, streamlining business processes, and enabling next-generation decision support and portfolio optimization capabilities.

Market Changes Have Accelerated the Case for Transformation

Opportunity Created by Complexity and Volatility

Global energy markets are becoming increasingly complex and volatile. Years of underinvestment have constrained energy supply, while the financial impacts of the energy transition and rising inflation challenge growth. Geopolitical unrest in Europe has further disrupted supply chains and reinforced the demand shift that began during the pandemic.

With this complexity and volatility comes a unique opportunity: organizations that have the right systems and processes in place can respond with agility and create exponential value.

Adapting to the Evolving and Interconnected Commodity Market Landscape

The rapid evolution and interconnectedness of global energy markets have accelerated the need for transformation. To thrive during the energy transition, Power & Utilities organizations must adapt quickly and develop new capabilities and digital pipelines to capture opportunities across geographies and asset types.

Evolution of the Commodity Market Landscape

Feed Stock/Fuel: Rigs, Wells, Oil, Natural Gas, Biofuel, RNG, Agro
Generation: Coal, Hydropower, Natural Gas, Nuclear, LNG, Batteries, CCS & CO2, Solar, Alternative Fuels, H2, Ammonia, Hydrogen Fuel, Emission, Wind, Renewable Credits
Transmission: Pipelines, Power Lines, Industrial
Distribution: Pipelines, Power Lines, Industrial, Commercial
Retail/End Customer: Commercial, Residential, Storage, Steel, Green Transportation, Cement, Agro, Credits, Renewable Credits, EV, Residential Solar, Storage

External Factors Impacting Organizations

Geopolitical unrest and the energy transition are shifting global energy market dynamics and organization portfolio mix.
Hydrocarbon supply growth is challenged by rising costs, longer lead times, increasing regulation, and fiscal constraints associated with rising inflation, increasing carbon taxes, and long-term reserve devaluation.
Oil & Gas and Power & Utility markets and infrastructure are becoming increasingly interconnected, driving the need for greater transparency and risk management across value chains.
New energies and new energy markets are rapidly emerging and changing the landscape.
Businesses are committing to net-zero emissions, putting increased pressure on power and grid.
Expanded use of external financing by power and gas companies, and independent power producers (IPPs) to scale up their renewable assets is exposing their companies to interest rate risks.
Market regulators are increasingly looking at new market designs and innovative market regulations and mechanisms to meet the ambition of energy transition and address the unique needs of renewables.

Addressing aging systems, manual business processes, and the proliferation of data silos across Supply, Trading, and Risk to increase agility and harness the power of artificial intelligence (AI) is a critical step in capturing value during the energy transition.

Conducting Business Across the Front, Middle, and Back Office

Managing with Legacy Infrastructure and Manual Processes

Organizations rely on a suite of specialized commodity/energy trading and risk management (C/ETRM) packages, shadow systems, and extensive manual processes to manage their business. These packages are effective for single commodity, single market operations, but were not designed for cross-commodity, multi-jurisdiction trading and risk analysis. Most C/ETRM systems lack integrated deal capture, contract management, scheduling, and reporting capabilities, and have limited front-office and mid-office capabilities.

Efforts to address C/ETRM system capability gaps have resulted in complex business architectures that are inflexible, inefficient, and costly to support. Disconnected, highly customized solutions, complex system integrations, and manual data entry and reconciliation processes restrict agility, hinder innovation, and increase the risk of security breaches and human error.

Internal Challenges

Inflexible, commodity-specific, on-premise core C/ETRM systems with overlapping functionalities cause data silos and process inconsistency.
Data silos, limited automation, and a lack of collaboration tools restrict timely, data-driven trade and risk analysis and hinder the use of AI to unlock next-generation business capabilities.
"Systems of record" functionality of C/ETRM systems limits the ability to support front office requirements including forecasting, pricing, and negotiations.
Commodity-specific system nuances drive over-customization and complex, multi-system architectures which are costly to support, difficult to integrate, and result in latency issues.
Capability gaps, limited solution options, and the slow pace of C/ETRM modernization hamper the ability to optimize, innovate, and support the Energy Transition.
Extensive manual intervention in data aggregation, analysis, and reporting across the front, mid, and back office increases the risk of human error and security breaches and limits the time available for higher value-add activities.

Common Supply, Trading, and Risk Personas and Tools

Personas:

VCO* / Front Office: Supply Chain/Marketer, Trader, Scheduler & Operator, Value Chain Optimizer
Middle Office: Trading Operations Manager, Market Risk Manager, Credit Manager, Contract Manager
Back Office: Accounting Manager, Regulatory Manager

External Interfaces:

Trading Exchanges, Market Data, eConfirm, Carbon Credit Registries, Reporting, Taxes

Shared Tools:

C/ETRM Packages (commodity focused, region focused, business focused, hybrid)
Master Data Management (Systems of Record)

Function-Specific Tools:

Front Office: Pipeline Bulletin Boards, ISOs (OATI)/Transmission, Credit Modeling Tools, Forecasting, Optimization
Middle Office: Confirmations (eConfirm), Risk Consolidation/Reporting, Credit Data/Solutions, Contract Management, Office Systems
Back Office: ERP, Tax Calculation & Reporting, Reconciliation Reporting, Regulatory Reporting

Corporate Functions:

Accounting, Legal, Governance, Sustainability, Procurement, HR, IT, etc.

*Value Chain Optimization

Moving away from a C/ETRM-centric architecture and streamlining business processes across the front, mid, and back office is necessary to reduce cost, complexity, and risk and address the rapidly evolving needs of the business.

Unlocking Value by Creating a Connected Data Landscape Across Supply, Trading, and Risk

A connected data landscape across Supply, Trading, and Risk enables organizations to unlock value by increasing agility, streamlining business processes, and enabling next-generation decision support and portfolio optimization capabilities.

Digital Ecosystem Value Drivers

Agility: Gain agility to maximize value in a rapidly evolving commodity market by enabling real-time access to data, analytics, and insights across the value chain.
Collaboration: Accelerate decision-making and enhance collaboration and innovation by breaking down silos and enabling seamless data sharing across teams and functions.
Visibility: Optimize portfolios and achieve sustainability goals by enabling end-to-end visibility across assets, markets, and operations.
Innovation: Enable next-generation decision support and portfolio optimization capabilities by harnessing the power of AI and advanced analytics.
Efficiency: Automate to improve efficiency and reduce risk by streamlining business processes and reducing manual intervention.

Maximizing Value While Maintaining Critical Operations

Our approach to modernizing Supply and Trading builds upon existing capabilities to minimize disruption to the business while building a strong digital foundation to unlock value now and in the future. These objectives will be achieved by:

Leveraging existing C/ETRM systems or replacing legacy C/ETRM systems that are past their shelf-life with respect to new market regulations
Embracing open, modular development
Following foundational data integrity and security principles
Enabling seamless business process automation to free up resources to focus on exceptions, validation, and analysis
Integrating comprehensive AI capabilities to accelerate data-driven decision-making and enhance trade and risk analysis
Drastically improving the user experience to enable modern, mobile, real-time decision support and collaboration tools
Reducing integration complexity to allow the business to unlock higher-value workflows without disrupting day-to-day business
Enabling transformative capabilities and the creation of new revenue streams to accelerate value creation
Delivering continuous value by employing agile methodology

Next-Generation Supply and Trading Solution Framework

Transform Your Business with a Data-Centric Digital Ecosystem

Our vision for a data-centric Supply and Trading digital ecosystem includes three core architectural components:

Service and Integration Layer: Leveraging comprehensive AI and low-code capabilities to create next-generation business services and digital user channels.
Unified Commercial Analytics Platform: Securely brings together data and analytics capabilities across Supply, Trading, and Risk to unlock high-value AI-enabled workflows.
Common Commercial Infrastructure Layer: Core systems to execute and record business-critical processes across Supply, Trading, and Risk.

Conceptual Solution Architecture

Digital User Channels: Supply, Trading & Risk Management, Contracts, Accounting, Retail/Marketing
Business Services: E/PI (Integration), Overall Margin, Portfolio Management, Supply Optimization, What-If Scenarios, Market Analytics, P&L Attribution
Foundation & Utility Services: Security, Data Orchestration, Process Automation, Master Data, Data Quality, Frameworks & Libraries, Common Data Models
Data & Analytics: Unified Commercial Analytics Platform across Supply, Trading & Risk
External Integration: Trading Exchanges, Market Data, Reporting, Carbon, Price Forecasting, Transmission, Demand Forecasting
Supply: Deal Capture, Deal Pricing, Scheduling, Nominations, Inventory Management, Actualization
C/ETRM Services: Market Risk, Credit Risk
Other Core Systems: ERP, Existing ERP Solution(s)
Infrastructure & Enablers: Commodities & Common Data Models, Security, Privacy, Compliance, Integration, APIs, Low-Code & AI, Collaboration, Self-Service Analytics, Low-Code Agility & Automation

Accelerate Value with Artificial Intelligence-Enabled Workflows

One of the most significant benefits of moving to a data-centric architecture is the ability to unlock AI and Generative AI-enabled use cases.

Imagine traders using simple queries to analyze third-party demand forecast predictions, generate simulated forecasts, and get recommendations on hedge positions and value optimization. Demand forecasting is just one of many potential use cases for real-time decision support across the front, middle, and back office.

AI and Generative AI-Enabled Use Cases Across Supply, Trading, and Risk

VCO* / Front Office:

Demand forecasting
Market simulation
Price forecasting
Schedule generation
Sentiment analysis
Policy and regulatory impact
Optionality and arbitrage opportunities

Middle Office:

Credit ratings and scoring
DOA & credit limits assessment
Trade reviews and comparison
Contract review and analysis
Contract generation
Risk policy violations
Bid and offers
Automated hedging

Back Office:

Automated reconciliation reporting
Invoice matching
Multi-variable data quality checks
Management reporting
Financial statement generation
Regulatory reporting
Independent monitoring of changes in regulation

Corporate Generative AI-Enabled Use Cases:

Connected Workforce (Employee Chat & Help Desk)
Information Discovery (expedite analysis by querying disparate document types and sources such as contracts, financials, etc.)
Co-pilots for M365, BI, Development, etc. (prompt co-pilots to create content, visualizations, apps, etc.)

*Value Chain Optimization

AI-enabled business use cases will define the next generation of Supply, Trading, and Risk operations. Organizations that embrace artificial intelligence will accelerate their ability to thrive during the energy transition by improving margins, dramatically enhancing productivity, and developing transformative capabilities and new revenue streams.

Embarking on the Transformation Journey

A critical first step in shifting from a C/ETRM-centric architecture to a data-centric digital ecosystem across Supply, Trading, and Risk is to define a framework for your transformation journey—one that prioritizes business outcomes and maps to a relevant value case.

Foundational activities to consider when defining the framework to move from a C/ETRM-centric architecture to a data-centric Supply and Trading ecosystem include:

Decoupling front, middle, and back-office systems
Identifying and reducing/eliminating shadow systems
Using containers to migrate from in-house storage and compute to the cloud
Federating and contextualizing data within the cloud to enable extensive analysis

Executing these steps while identifying, automating, and eliminating low-value add tasks will reduce complexity and risk, and deliver more than enough cost savings to fund the next phase of transformation: implementing platform-level AI and Generative AI, innovation, and collaboration capabilities to unlock new business use cases such as:

Creating dashboards with real-time insights based on streaming market and peer data and intraday visibility to key trading and risk, portfolio, and financial metrics
Leveraging AI and Generative AI to enable trader decision support and trade recommendations
Automating trend and trade analysis, contract reviews, and terms and conditions evaluation
Developing a user-friendly, mobile, integrated trading view with co-pilot capabilities
Optimizing and automating scheduling recommendation and contract generation
Integrating open-source risk analytics
Cross-commodity, multi-jurisdiction portfolio optimization
End-to-end carbon auditability and full-cycle cost analytics
Carbon marketplace development and new energies trading
Transaction management with shared ledgers
Data, intelligence, algorithms, and application monetization

Finally, your organization can start creating incremental value for the business by developing transformative capabilities and new revenue streams. The key to success is to first unlock the value that already exists (H1), then build upon it to enable new capabilities (H2), and finally create incremental value for the business through transformative capabilities and new revenue streams (H3).

Transformation Journey Framework

The transformation journey progresses from tactical to strategic, and from existing business models to aspirational, evolutionary models. The journey is divided into three main phases:

H1:

Automate manual front-office, mid-, and back-office tasks
Decouple primary systems and reduce shadow systems
Migrate storage and compute to the cloud
Federate and contextualize data in the cloud
Real-time insights based on streaming market and peer data
Target Business Outcomes: Improve Efficiency and Increase Agility

H2:

AI + Gen AI-enabled forecasting, market simulation, scenario analysis, and carbon tax planning
AI + Gen AI-enabled trader decision support and action recommendations
Automate trend and trade analysis, contract reviews, and T&Cs evaluation
Automate and optimize activities such as scheduling, contract generation, and reconciliation reporting
Real-time visibility on key metrics (e.g., trading and risk position and P&L)
Target Business Outcomes: Enhance Collaboration and Drive Innovation; Enable Advanced Trading and Risk Practices

H3:

End-to-end carbon auditability, full-cycle cost analytics, and carbon marketplace development
New revenue streams by monetizing intelligence, algorithms, apps, data, etc.
New energies trading
Mobile integrated trading view with trader co-pilot
Agile proprietary algorithms and applications
Automate transaction management with shared ledgers
Target Business Outcomes: Gain Full-Cycle Visibility including Sustainability Impacts; Grow Revenue through New Business Models

Business Principles:

H3: Partner and Co-Innovate to Change Market Position
H2: Capitalize on Investments in New Technology for Strategic Advantage
H1: Optimize the Core Through Data and Operational Efficiency and Resiliency

Prioritizing where to start and how far to take your journey should be based on your organization’s unique market position, ambitions, and transformation vision.

Enabling the Future with Publicis Sapient and Microsoft

Leading Power & Utilities companies around the world are partnering with Publicis Sapient and Microsoft to drive strategic digital transformation initiatives across their business.

Case Study: Implementing Physical and Financial Trading and Risk Management for Renewable Assets

Imperative for Change

A global multinational energy company, one of the world’s largest offshore wind power generation companies, aims to be climate-neutral by 2040, supported by a €55 billion investment into renewables and creating more than 60 gigawatts (GW) of green capacity. The Supply & Trading business unit was tasked with maximizing wholesale margins while effectively managing exposure in increasingly volatile energy markets. Asset optimization was seen as key to driving value. The organization embarked on a journey to establish a common platform for its global Supply & Trading group to:

Integrate the company’s various commercial capabilities gained from acquisitions
Standardize systems and processes
Limit customizations to simplify the landscape

Transformative Solution

Publicis Sapient and Microsoft’s objective was to standardize the company’s operating model and leverage synergies across the portfolio for commercial optimization. The approach included:

Providing an integrated end-to-end Trade to Cash business solution to maximize value, minimize risk, and be fit for the future
Adopting standard business processes to enable synergies across the portfolio
Implementing a standard and stable ETRM solution that meets both global and country-specific needs

A phased integration roadmap—comprised of eight separate releases—prioritized long-term trading and quickly enabled critical risk management activities and controls.

Business Impact

Streamlined and standardized business process framework for the North American front, middle, and back offices
Developed a centralized certificate capability spanning North America and beyond, fostering operational efficiency and standardization
Embraced a system-centric approach leveraging standard solutions (ENDUR platform) and replacing Excel-based solutions
Established bid-to-ask models for trading congestion, day-ahead, and battery optimization, resulting in a significant increase in trading P&L
Defined an implementation in progress for a global risk and revenue modeling platform
Launched fully automated settlement and invoicing processes

Case Study: Implementing a Wholesale and Retail ETRM Platform for a Power & Gas Company

Imperative for Change

A fully integrated North American Power & Gas business, active in both trading and marketing to retail and commercial/industrial customers, provides a mix of power from wind- and gas-generation fleets and upstream gas production. Regulated in the United States and Canada, the business spans five geographies and two currencies. Following a period of growth and acquisitions, the organization needed to:

Improve operational efficiencies
Adopt an agile platform to support the organization’s growth vision
Upgrade aging systems and valuation and reporting silos to enable consistent reporting of complex positions

Transformative Solution

Publicis Sapient designed and implemented the ETRM platform to support the integrated wholesale/retail power and gas business. This design helped:

Integrate exchanges, pricing systems, ISOs, and enterprise resource planning systems
Increase automation across the transaction lifecycle, replacing manual spreadsheet reporting
Enhance data migration, involving mapping data elements across the source and targeting systems with tools to validate data quality
Integrate the wholesale and retail power business
Consolidate Power & Gas trading platforms for better visibility of the integrated business

Ongoing support includes upgrades and end-of-day services.

Business Impact

Consolidated ETRM systems to support wholesale and commercial/industrial business
Managed renewable identification numbers, power purchase agreements, and derivatives in a consolidated view of exposure and risk
Improved operational efficiency with an agile ETRM platform
Enhanced forecasting accuracy and reduction in margin leakage
Improved the customer experience and provided enhanced customer analytics
Enabled better decision-making through increased visibility into business driver performance
Leveraged audit tracking functionality, internal data governance, and clear segregation of duties for better operational controls

Contact Us

To learn more about how Publicis Sapient and Microsoft can help your organization transform Supply, Trading & Risk, please contact us at:

energyandcommodities@publicissapient.com

About Publicis Sapient

Publicis Sapient is a digital business transformation partner helping established organizations get to their future, digitally-enabled state, both in the way they work and the way they serve their customers. We help unlock value through a start-up mindset and modern methods, fusing strategy, consulting, and customer experience with agile engineering and problem-solving creativity. As digital pioneers with 20,000 people and 53 offices around the globe, our experience spanning technology, data sciences, consulting, and customer obsession—combined with our culture of curiosity and relentlessness—enables us to accelerate our clients’ businesses through designing the products and services their customers truly value.

For more information, visit https://www.publicissapient.com