Jeffrey Wagner, founder and CEO of Aquilon Energy Services recently published an article about forces that are driving changes in the energy industry, and the implications of those changes for settlement operations.
Over the past year, the Energy Settlement Network® has experienced significant growth, with over 500 companies now settling energy transactions on the network. This growth signals a significant shift in the industry’s approach to settling energy transactions.
New energy market dynamics
There are four primary forces that are propelling a paradigm shift in the way that energy transactions are settled. The forces are:
1. A changing energy economy.
The energy economy is moving toward a diverse fuels mix, with oil, gas, coal and non-fossil fuels each projected to contribute around 25% by mid-century.
2. Increasing complexity and inconsistency.
Individual invoices can typically total tens of millions of dollars. Given the nature of the energy supply chain, there are often discrepancies that must be resolved before invoice payments can proceed.
3. Proliferation of data.
The growth of renewable energy sources, which can see price fluctuations as frequently as every five minutes, is one contributor to the increase of data. But it’s not the only factor.
4. The drive to improve operational efficiency.
The changing energy economy that is driving a proliferation of new products, players, and consequently data, is also increasing the imperative on operational performance.
A new approach to settlement operations
With an understanding of these market dynamics, Aquilon collaborated with industry leaders to develop a platform that helps energy companies settle transactions more efficiently.
The growth of the network indicates that the industry is recognizing the significant value that ESN offers to energy companies, introducing meaningful operational efficiencies into the settlement process. The efficiencies are manifested in three key areas:
- Early identification of discrepancies, resulting in an exception-driven process that prioritizes the resolution of breaks.
- Real-time collaboration with access to a secure centralized hub for all counterparty communication, documentation and invoices.
- Built-in data security that prevents fraud with traceability and transparency of all transactions, reducing the risk of lost or stolen data.
Aquilon Energy Services Inc. develops innovative software and service solutions for the energy industry The Aquilon team combines deep industry insights with advanced technology to bring reliable, collaborative solutions to the energy market. The firm’s Energy Settlement Network (ESN®) enables energy participants of all sizes to manage, access and settle large volumes of power, oil and natural gas transactions with their counterparties. The company, which was named the 2017 Innovation of the Year by Energy Risk magazine, is based in Lisle, Illinois, and has an office in Houston. For more information, visit www.aquiloninc.com