We’ve come along way since our Optimisation Desk was established back in 2004.
It was the first trading desk of its kind in the industry to offer a risk management focus for large retail customers wanting to buy energy flexibly from the wholesale market. The norm at the time was annual or longer fixed-price contracts.
But by March 2005, around 25% of our 20GWh+ customer base had moved from fixed to flexible purchasing, including household names in the supermarket, telecoms, manufacturing and water industries.
At the time, the actual transactions were carried out by traders in our sister company RWE. But by early 2006, our Optimisation Desk started offering deal execution services direct.
Formalising market intelligence
The Desk also started producing more formal npower-branded Daily Energy Market Briefs and Live Energy Market Snapshots. Then Carbon Trading, Mid-market Flex and Voluntary Load Management – an early demand-side response product – were launched in December 2006. And by the end of 2006, the team was serving 75 flex customers.
A natural progression in early 2007 was for the Optimisation Desk’s focus to expand from transactions to risk management services via a range of innovative tools. These included an extended range of market reports, position reports, execution techniques that illustrated potential trading strategies, and deal execution services including netting and unset/reset.
The following year, Policy Shaper was added to help customers define a clear and robust risk management strategy, plus Value at Risk (VaR) reporting to aid more effective risk management.
Export contracts join the party
Then in 2009, we signed our first flex power export contract, facilitating selling to – as well as buying from – the wholesale market.
We also launched our online Risk Navigator portal, enabling customers to access their own trading reports and market intelligence 24/7. And we started offering technical analysis, whereby customers could study the market through historical charts. By the end of 2009, the Desk managed 125 flex customers, taking 4,627 calls leading to 2,957 trades that year.
All this hard work paid off in 2010, when npower was awarded both ‘Energy Supplier of the Year’ and ‘Consumer Supplier of the Year’ in recognition of the outstanding services, products and innovation we provided to our customers, with the Optimisation Desk playing a key role.
Then in 2011, the Desk itself won ‘Best Risk Management Product or Service of the Year’, for energy price risk management services to enable customers to cope with price volatility within the energy markets.
By this stage, they were serving 151 flex power contracts and taking close to 5,000 calls and making 4,000 trades a year.
Making the market more accessible
To help customers with less time, resources and/or expertise access the wholesale market, Direct Budget Management (DBM) was launched in 2012. This product was the first of its kind in the industry, and has made flex contracts available to a far wider customer base.
For more sophisticated customers, we introduced Power Purchase Agreement (PPA) Netting and Sleeving functionality.
DBM and another flexible purchasing tool for smaller customers called PriceWatch helped us win ‘Best Risk Management Product or Service of the Year’ in 2012.
Focus on innovation
Innovation and progression are ongoing aims for the Optimisation Desk, with an enhanced Risk Navigator service launched in 2013 featuring expanded functionality.
Then in 2014, in partnership with Debenhams, we won ‘Energy Buyer of the Year’ with our product offering highlighted as best value.
We launched Select & Secure in 2015, simplifying flexible market access for even smaller business customers by offering an online transacting tool.
By 2016, our desk services further expanded to cover comprehensive risk management services – from strategy consultation and hedging policy support to market reporting warning price functionality – as well as wholesale energy market access, market intelligence, data provision and price analysis.
Taking expertise to a wider audience
Helping customers better understand how to benefit from the market and stay within budget has been a key development, with DBM training days forming part of the new range of nBS Energy Management Qualifications in 2017.
Sharing market expertise, research and observations with a wider audience also became a focus in 2018, with Ben Spry, former Optimisation Desk Manager and now Head of Risk Management Services, posting regularly on LinkedIn and Twitter to his 1500 followers.
As of April 2019, the Optimisation Desk is now a nine-strong team serving more than 250 customers and executing at times over 100 trades a day. As part of our new innovative Energy HQ brand, it supports customers to optimise and better integrate energy purchasing, selling and management.
The focus for the coming years
Looking ahead, as we see growing volumes of intermittent renewable in the UK energy mix, we expect greater power price volatility – and therefore a greater need for system support services and increasing value from flexibility.
Providing a world class route to the wholesale markets – and in particular the Day Ahead and Within Day markets – has therefore become a key priority for the Optimisation Desk, enabling our customers to monetise flexibility, be that load management or asset based.
Additionally, the Desk now plays a key role in operating our Demand Side Response service, managing customer volume participating in Triad and red-rate avoidance, National Grid services such as STOR and both Static and Dynamic Frequency Response, with customers assets controlled centrally by our team of specialists in Swindon.
By providing access to ancillary services, the Capacity Market and the wholesale market, we can help customers build compelling business cases for investment in flexibility, despite the ever-changing policy and structural energy landscape.
With the market in a constant state of change and development, seeing what’s set to follow over the next five and ten years will be interesting to see…
For now though, you can find out more about the full range of services and support here.