IT Focus: The benefit of foresight

Wholesale power trading brings numerous challenges for generators, not least avoiding penalties for imbalances. To operate effectively, companies need to integrate their IT systems, giving traders access to accurate and timely information.

Dr Ian Howells, SeeBeyond

Privatized in 1996, British Energy plc is the UK’s largest electricity generator. British Energy Power and Energy Trading (BEPET) manages the purchase and sale of electricity in the UK market. With annual output in excess of 70 TWh, the division has the task of placing some 1.5 TWh in the markets each week.

A key role is to ensure that output and sales are balanced in each half-hour so that British Energy has sales contracts equal to the volume of electricity generated. To achieve this, the experienced trading team employs a staircase trading strategy that builds up contract sales step by step over time. The first step represents long-term contracts, the second step medium term contracts and the last step represents short-term contracts.

The process of achieving a balance generally involves either some trading in the wholesale markets and/or adjusting the output of Eggborough, British Energy’s highly flexible 2000 MW coal fired power station in Yorkshire.

Figure 1. Eggborough is British Energy’s highly flexible 2000 MW coal fired power station in Yorkshire, UK
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Business challenges

Like many companies operating in a competitive electricity market, British Energy faces a number of challenges:

  • Deregulation has led to increased competition, from within and from abroad
  • Frequent mergers and acquisitions leading to duplication of operational and customer facing IT systems
  • Choices now available for the consumer
  • Regulatory pressure on tariffs
  • The requirement for accurate estimation of generation and supply commitments at all times.

In response to these pressures, energy and utilities organizations must:

  • Deliver better customer intimacy and responsiveness
  • Standardize internal business processes across service offerings
  • Integrate existing infrastructure with new energy risk applications
  • Support an increasing number of data exchanges, both internal and external
  • Deliver faster time to market for new offerings.

However, rapid growth has left many organizations with unintegrated, stove-piped applications and fragmented business processes which are impeding their ability to achieve many of these objectives.

Electricity generators in the UK sell their output to suppliers, which in turn supply the electricity to their customers. Under the arrangements for electricity trading, several different markets with different timeframes exist. The overall picture is complex, especially as the National Grid Company operates a balancing mechanism to match supply with demand for every half-hour period throughout the day. The challenge for a supplier like British Energy is to match the amount of electricity generated with forecasts of customer demand for each period. Any mismatches between supply and demand are subject to an energy imbalance price, which amounts in practice to a financial penalty.

Accurate estimation of generation and supply commitment depends on information from a variety of sources. To bring this information together, British Energy relied at one time on spreadsheets and databases, with much re-keying of data. However, there was a growing need to integrate the company’s systems so that traders using the trading and risk management system would have access to accurate, timely information.

At the time, the trading market was relatively new, but British Energy anticipated strong growth in the number of trades as well as substantial changes in trading regulations. These changes began with the introduction of the New Electricity Trading Arrangements (NETA), which would require a number of new applications. A flexible, scalable integration platform was therefore a priority.

Solution overview

After evaluating the market, British Energy chose to implement SeeBeyond’s eGate Integrator platform. Not only did eGate Integrator meet the company’s need for flexibility and scalability, but it also had several other key strengths.

“We discovered that eGate Integrator was very well-structured and easy both to use and to support. One feature that particularly appealed to us was the ability to audit the movement of data through the system and pinpoint any errors or problems,” explained Jeremy Lock, head of trading systems at BEPET.

Working with LogicaCMG, supported by training and consultancy from SeeBeyond, British Energy used eGate Integrator to construct interfaces between its Zai*net Manager trading system and other internal applications. Today, more than 30 interfaces are managed using eGate linking more than ten applications on the wholesale trading side. The integration also extends to a number of system links to applications used within the company’s direct supply business. A six-strong British Energy on-call team manages the system around the clock, with LogicaCMG support.

Using information imported to Zai*net Manager, British Energy’s traders ensure that customer demand ” resulting from long-term, medium-term and short-term contracts ” is matched to the volume of electricity bought and sold. Generally speaking, the process of achieving a balance involves trading in the wholesale markets and adjusting the output of the company’s power stations.

Figure 2. Working with LogicaCMG, British Energy used eGate Integrator to construct interfaces between its Zai*net Manager trading system and a variety of other internal applications
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Through process-driven integration and automation, SeeBeyond solutions enable energy companies to link disparate business systems to integrate trading and risk management systems, assimilate new systems from acquisitions and decouple divestitures with minimal disruption. Integration solutions can help enable efficient work management through real-time scheduling and provide visibility into purchasing and inventory to drive lower logistics and inventory costs.

eGate Integrator is a J2EE compliant and web services based distributed integration platform that serves as the foundation of the SeeBeyond ICAN Suite 5.0, and is designed to dramatically lower the total cost of ownership (TCO) of developing, deploying, and managing integrations over time. eGate provides core integration including comprehensive systems connectivity, guaranteed messaging and robust transformation capabilities while providing a unified, single sign-on environment for integration development, deployment, monitoring and management. eGate Integrator is the first and only J2EE certified integration platform to support native operation of its integration technology over third party J2EE application servers and includes the industry’s first enterprise-scale integration change management tools significantly lowering TCO.

Figure 3. Connecting to partners and customers using SeeBeyond
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Business benefits

According to Lock, the use of eGate Integrator and the skills of British Energy’s traders have enabled the company to minimize avoidable costs associated with the energy imbalance price. In principle, these costs could amount to tens of thousand of pounds within a single half-hour period and therefore the effect on maintaining income has been considerable.

eGate Integrator has also proved capable of supporting an increase in the number of trading transactions as there has been a three-fold increase in transactions over a three-year period. Today, although many millions of messages a year are handled using eGate Integrator, the resources devoted to support remain essentially unchanged and investment in additional integration technology has been minimal. eGate Integrator delivers a single view of the entire integration environment, enabling Lock and his small team to manage a large number of interfaces and to resolve faults efficiently and effectively. The robustness and reliability of the product are an additional advantage, with support calls almost non-existent.

Figure 4. ICAN 5.0 is See Beyond’s integration product suite
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Lock claims that implementation and modification of interfaces is straightforward, making the business flexible. To keep up with the evolving requirements of NETA, energy suppliers have to modify their interfaces frequently as definitions used in the central markets change. British Energy has been able to accomplish this smoothly and without difficulty.

Regardless of how much growth there might be in trading volumes, British Energy is confident that it can continue to rely on eGate Integrator to meet its integration needs. It also anticipates that SeeBeyond will become the platform for integration initiatives in other areas of its business.

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