Energy Trading & Risk Management (ETRM) Market to Reach US$ 68.2 Billion by 2034, Growing at a 4.9% CAGR from 2024

The global energy trading & risk management (ETRM) market (Marché du commerce de l'énergie et de la gestion des risques (ETRM)) was valued at US$ 37.4 billion in 2023 and is projected to grow at a compound annual growth rate (CAGR) of 4.9%, reaching US$ 68.2 billion by 2034. The market is driven by the adoption of renewable energy and the substantial fluctuations in energy prices, which necessitate effective risk management solutions.

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Analyst Viewpoint

The rise in renewable energy adoption significantly boosts ETRM market dynamics. ETRM solutions tailored for renewable energy effectively manage counterparty and operational risks. Additionally, the volatility and price fluctuations in energy markets, including those of renewable energy sources, drive demand for ETRM to ensure reliable energy supply.

Key players in the ETRM market are focusing on developing advanced ETRM systems with features such as live position tracking and profit and loss (P&L) monitoring. Cloud-native ETRM systems are also being introduced, allowing end-users to leverage trading-related intellectual property without the need for extensive in-house IT resources.

Market Introduction

Energy Trading & Risk Management (ETRM) systems assist energy companies in managing their trading activities and associated risks, including the buying, selling, and trading of energy commodities such as electricity, natural gas, and oil. ETRM systems offer cost optimization through hyperautomation, simplify legacy systems, reduce overheads, and improve scalability and performance.

ETRM software includes:

Trading & risk management software
Commodity management software
Data management and analytics software
Logistics & operations management software
Settlements & accounting software
Regulatory compliance software
These software solutions incorporate functionalities such as trading and position management, risk analysis, reporting, and settlement, helping energy companies optimize their trading strategies.

Market Drivers

Rise in Adoption of Renewable Energy

The increasing adoption of renewable energy leads to fierce competition in renewable energy pricing. Vendors, including traders, suppliers, and distributors, are shifting from manual processes to ETRM solutions to stay competitive. Government initiatives, such as tax benefits and financial incentives, are also driving renewable energy usage. For instance, the Europe and Central Asia Renewable Energy Scale-up (ECARES) program aims to add 15 GW of renewable energy capacity and reduce 240 million metric tons of carbon emissions in its first phase.

Substantial Fluctuations in Energy Prices

Energy prices fluctuate due to factors like weather, world events, supply chain issues, and power generation costs, posing risks for energy sector stakeholders. ETRM systems are essential for managing these fluctuations, aiding in activities such as position management, valuation, and risk reporting. Changes in weather and climate, physical constraints related to storage and distribution, and the introduction of new technology also impact energy price dynamics.

Regional Outlook

North America Leading the Market

North America held the largest ETRM market share in 2023 and is expected to maintain its dominance during the forecast period, driven by growth in oil and gas trading. In 2022, the U.S. was a leading exporter of natural gas. The region is witnessing the adoption of intelligent ETRM solutions for natural gas trading, helping traders navigate complex and volatile commodity markets.

Key Players

Key players in the global ETRM market include ION, Amphora Inc., Eka, SAP, , Publicis Sapient, ABB, Trayport Limited, and FIS. These companies offer a comprehensive range of efficient and cost-effective ETRM solutions and are focusing on real-time and day-ahead energy trading markets, minimizing human intervention across the trade lifecycle.

Key Developments

In April 2024, Symphony Technology Group acquired Eka Software Solutions, a provider of commodity management solutions.
In 2023, Trayport Limited and Montel Marketplace announced an agreement for Trayport's Joule platform to enable access to the Montel Marketplace for trading Guarantees of Origin (GOs).
Conclusion

The ETRM market (에너지 거래 및 위험 관리(ETRM) 시장) is set for substantial growth, driven by the rise in renewable energy adoption and significant fluctuations in energy prices. North America, with its robust oil and gas trading sector, leads the market. Key players are innovating to provide comprehensive and efficient ETRM solutions, ensuring a dynamic and competitive market landscape over the next decade.

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