Outsourced Power and Gas Risk Management Across US Markets

A US-based outsourced risk and trading service provider has successfully implemented Lacima Analytics to deliver trading and risk management services on behalf of clients operating in power and gas markets across the United States.

The Project

The client offers outsourced trading and risk management services to a diverse customer base, including utilities, municipalities, industrials, and independent power producers, across multiple US energy markets. To scale efficiently and provide a consistent service to all clients, they required a unified platform capable of modelling thousands of price and demand nodes, while also storing, valuing, and analysing each client portfolio individually within the same system.

Transparency was essential so that clients could confidently rely on the valuations, hedging recommendations, and market insights being delivered. The chosen solution needed to support complex modelling and advanced valuation and risk analytics.

The Client

The client is an experienced US-based power marketer providing optimisation, power trading, risk management, and settlement services. They manage over 44,500 MW of generation and more than 3,800 MW of load across the country.

The Solution

The provider implemented Value-at-Risk (VaR), Earnings-at-Risk (EaR), and Potential Future Exposure (PFE) modules to manage market and credit risk for large, complex portfolios.

As part of the implementation, Lacima extended the capabilities of its multi-unit generator model to include duct firing functionality and enhanced the reporting tools to deliver detailed operational insights. Lacima’s valuation and pre-deal analysis tools are now used for structuring, origination, and fast-turnaround deal assessments.

The Outcome

Lacima was chosen for its unique ability to co-model assets and contracts across a large number of market nodes and pricing regions, something no other vendor in the selection process could support at scale. By consolidating all client portfolios into a single, configurable platform, the provider has been able to deliver consistent, high-quality risk analysis.

Using Lacima Analytics means they can provide valuation, hedging and risk management services using a single consistent approach for all clients – leading to faster, more focused analysis.

The system’s ability to support a wide range of contract types and price nodes has opened new opportunities for market expansion, more complex financial modelling, and better hedging strategies for clients. It also enables their trade desks to rapidly evaluate deal opportunities using consistent modelling assumptions and analytics.