Energy Trading and Risk Management (ETRM) Market Size, Share, Growth, and Industry Analysis, By Type (Vendor License and Service and SaaS or Hosted Service), By Application (Power, Natural Gas, Oil and Products and Other), Regional Forecast By 2032

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Energy Trading and Risk Management (ETRM) Market Report Overview

The global energy trading and risk management (ETRM) market size was in 1.382 billion in 2023 & the energy trading and risk management (ETRM) market is expected to reach USD 2 billion by 2032, exhibiting a CAGR of 4.2% during the forecast period.

The COVID-19 pandemic has been unprecedented and staggering, with experiencing lower-than-anticipated demand across all regions compared to pre-pandemic levels. The sudden rise/decline in CAGR is attributable to the market’s growth and demand returning to pre-pandemic levels.

The practice of purchasing, selling, and managing energy commodities like electricity, natural gas, crude oil, coal, and derivatives related to these commodities is known as energy trading and risk management (ETRM). It combines physical trading with financial tools to improve energy procurement, reduce risks, and increase profitability. To expedite and automate different parts of energy trading and risk management, energy corporations, including utilities, power producers, gas providers, oil refineries, and commodities trading firms, employ ETRM systems. These systems combine front-, middle-, and back-office duties to improve decision-making and streamline operations.

This module makes it easier to track and handle energy deals, especially those involving sophisticated derivative instruments. It features trade confirmation, price, position management, and trade entry functionality. This module evaluates and manages a variety of risks related to the trading of energy, including operational risk, regulatory compliance, credit risk, and market price volatility. It offers resources for scenario modelling, limit monitoring, exposure management, and risk analysis. Market data feeds are used by ETRM systems to offer historical and real-time data on market trends, supply-demand dynamics, and energy pricing. Trading and risk managers can use analytics tools to help them make decisions based on this data.

COVID-19 Impact: Remote Work and Digitalization to Hinder Market Growth

Unprecedented market disruptions brought on by the epidemic heightened price volatility and uncertainty. Significant changes in energy consumption and supply patterns were caused by lockdown measures, travel restrictions, and decreased economic activity. ETRM systems had to adjust to quickly shifting market conditions and deal with rising price and risk management volatility. Energy businesses were forced to rely significantly on digital tools, such ETRM systems, to manage their operations as a result of the adoption of social distancing measures and remote work regulations. The epidemic hastened the use of remote access and cloud-based ETRM solutions, enabling traders and risk managers to operate from home while maintaining company continuity. The pandemic-induced global economic slowdown led to a decrease in energy consumption in a number of different industries.

LATEST TRENDS

"Advanced Analytics and Artificial Intelligence (AI) to Enhance Market Growth"

The need for ETRM systems to facilitate the integration of renewable energy into the grid is expanding as sustainability and renewable energy sources come into greater emphasis. This entails handling the intricacies of power purchase agreements (PPAs), renewable energy certificates (RECs), and balancing intermittent generation with demand. Advanced analytics and AI technologies are being used by ETRM systems to improve trading tactics, risk control, and decision-making. To analyse market data, spot trends, and improve trading processes, this also involves predictive analytics, machine learning algorithms, and natural language processing. The use of energy storage devices like batteries is becoming more widespread. ETRM systems are being given functions to manage storage capacity, market arbitrage opportunities, and charging and discharging strategies to optimise energy storage operations.

Energy Trading and Risk Management (ETRM) Market Segmentation

• By Type

Based on type market is classified as vendor license and service and SAAS or hosted service.

• By Application

Based on application market is classified as power, natural gas, oil and products and other.

DRIVING FACTORS

"Market Volatility and Uncertainty to Augment Market Growth"

Various causes, including geopolitical events, supply-demand mismatches, weather patterns, and regulatory changes, can cause volatility in the energy markets. For monitoring and reducing risks related to price swings and market uncertainty, ETRM systems are crucial.

The energy landscape is changing as a result of the global transition to cleaner, more sustainable energy sources like renewables. The complexity of intermittent generation, renewable credits, and changing regulatory frameworks are managed by ETRM systems as they evolve to facilitate the grid integration of renewable energy. The emergence of new markets, trading tools, and regulatory requirements has increased the complexity of the energy trading environment. To handle the complexities of multi-commodity trading, derivatives, complicated contracts, and changing market structures, ETRM systems are required.

"Technological Advancements to Propel Market Growth"

Various regulatory frameworks and reporting requirements set forth by regulatory organisations apply to the trade of energy. ETRM systems monitor risk limits, offer transparency in trading activity, and facilitate accurate reporting as ways to assure compliance with rules. ETRM systems are changing as a result of technological advancements including cloud computing, big data analytics, and artificial intelligence. More advanced risk modelling, real-time data analysis, quicker trade execution, and better decision-making are all made possible by these technologies. Energy firms understand how critical good risk management is to streamlining their processes and guarding against unexpected losses. In order to assess, monitor, and manage risks along the entire value chain, including market risks, credit risks, operational risks, and regulatory risks, ETRM systems offer the necessary tools and functionalities.

RESTRAINING FACTORS

"Legacy Systems and Infrastructure to Impede Market Expansion"

ETRM systems can be expensive to implement, adapt, and keep up. Challenges might also arise from the complexity of integrating ETRM systems into current IT infrastructure and procedures. It can be challenging for smaller energy firms to justify the costs of implementing ETRM. Many energy businesses continue to use antiquated technologies that might not work with contemporary ETRM platforms. It can be difficult and time-consuming to integrate ETRM systems with current infrastructure and data sources. Various sources, including as market data feeds, trading platforms, and internal systems, must provide accurate and trustworthy data for ETRM systems. The efficiency of ETRM systems might be hampered by poor data quality or problems integrating data from various sources.

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Energy Trading and Risk Management (ETRM) Market Regional Insights

"North America to Dominate the Market Due to Wide Variety of Commodities"

A well-established energy trading market with a wide variety of commodities and a high level of market activity exists in energy trading and risk management (ETRM) market share in North America, particularly the United States. The area has a strong regulatory environment and many utilities, trading companies, and financial institutions among the participants in the energy market. Many ETRM solution suppliers are based in the United States, and ETRM systems have been widely used in this country.

KEY INDUSTRY PLAYERS

"Key Players Focus on Partnerships to Gain a Competitive Advantage"

Prominent market players of energy trading and risk management (ETRM) market are making collaborative efforts by partnering with other companies to stay ahead of the competition. Many companies are also investing in new product launches to expand their product portfolio. Mergers and acquisitions are also among the key strategies used by players to expand their product portfolios.

LIST OF TOP ENERGY TRADING AND RISK MANAGEMENT (ETRM) COMPANIES

• OpenLink (U.S.)
• FIS (U.S.)
• Sapient (U.S.)
• Accenture (Ireland)
• Trayport (U.K.)
• Allegro (Poland)
• ABB (Switzerland)

REPORT COVERAGE

The energy trading and risk management (ETRM) report anticipates a detailed analysis of the global market size at the regional and national level, the ssegmentation market growth and market share. The prime objective of the report is to help user understand the market in terms of definition, market potential, influencing trends, and the challenges faced by the market. Aanalysis of sales, the impact of the market players, recent developments, opportunity analysis, strategic market growth analysis, territorial market expansion, and technological innovations are the subject matter explained in the report.