Solidifying the Energy Trading BridgeMon, 02/25/2019 - 17:48
Q: What Makes Antuko the ideal partner for Mexico’s wholesale electricity market (WEM)?
A: Our understanding of the evolution of the Local Marginal Price puts us at the forefront of Mexico’s energy trading market. We have developed a range of tools around this knowledge with which we can assist clients that engage in trading transactions. Our services are rooted in a thorough model that projects the workings of the SEN into the future, complemented by Monte Carlo value-at-risk analysis. We have already developed two commercialization vehicles in Chile that manage more than 500GWh/y each. In Mexico, we are developing a qualified supplier capitalized by our own balance sheet in combination with investors interested in placing capital in energy trading operations. We offer the advantage of a specialized outsourced service in trading market participation, bypassing the need to build a corporate energy department from the ground up.
Q: How is Antuko tackling the pricing imbalance between generators and qualified users?
A: Qualified users are looking for short-term commitments payable in local currency while generators prefer 15-year PPAs in US dollars. Because they are responsible for the payment from qualified users to CENACE, qualified suppliers could bridge this gap through the qualified user’s short-term local currency PPA. The complex intricacies of these transactions require choosing qualified suppliers that can best manage this imbalance risk. Adequate management of these variables guarantees secure energy supply, effective representation services, and competitive prices in the long term.
Q: How is Antuko positioning itself in a price-driven market?
A: To conquer a price-driven market, one must fully grasp each cog within its inner workings. In Mexico’s WEM, each generator reports the marginal cost of its generation directly linked to the commodity used, such as natural gas, diesel or fuel oil. Renewables are the exception as the absence of an indexed commodity brings their marginal cost close to zero. The last MWh used before supplying the demand of an electricity node is the reference price. This happens on an hourly basis in close to 3,000 nodes across the country. The results are directly linked to the composition of the energy matrix, fuel costs, the power generator’s production profile, energy demand and the transmission grid’s capacity, where congestion hikes electricity prices.
To compete, Antuko developed three crucial and interrelated divisions. First, our quantitative consulting division is fully dedicated to price projections based on nodal prices, predicting the grid’s behavior and anticipating economic dispatches. The data gathered is critical for future project viability assessments and useful for financial entities looking to participate. By developing accurate forecasts of local marginal prices, we can craft competitive trading offers.
Our second division is commercialization through qualified supply. On the qualified user side, we can include bundled or component pricing for energy, capacity, and CELs, in addition to pass-through services for distribution and transmission rates as published by CRE. CFE’s rates are characterized by an identifiable and aggressive upward trend, whereas we can provide a predictable price slope, conferring certainty to future energy rates. On the generator’s side we offer tailor-made PPAs depending on the inherent characteristics of the power plant’s location, generation technology, financing schemes, and surrounding energy infrastructure to turn it into a bankable project. We can manage production surpluses, swaps, short-term products and hedges depending on the project’s location and consumption profile.
The final division is asset management services, which primarily consist of market representation. As qualified suppliers, we are required to have a 24/7 desk and operate seamlessly as CENACE’s Market Information System (SIM). We developed an in-house software solution to automate market participation, invoicing, re-billing, collection and payments. Antuko is the back and middle office of market participants’ activities before CENACE.