Since 2012 and over different projects, SSE has successfully implemented an enterprise-wide solution of Lacima Analytics VaR, EaR, credit risk and limits and breach management for a complex multi-commodity portfolio of gas and power assets.
Since 2012, SSE have undertaken several projects with Lacima. The relationship began when SSE selected Lacima after undertaking a comprehensive review of risk management software systems available in the market. They were seeking a solution that would provide a single consolidated view of risk across their entire portfolio as well as meet SSE’s bespoke requirements, including the ability to handle the more complex characteristics of their power generation assets, storage facilities, and gas supply contracts. With a change in business needs in 2018, SSE sought the ability to perform credit exposure calculations at a portfolio level for the first time. They then identified a new project to improve controls through the reduction of manual processes and to improve auditability with the provision of a full audit history of limit changes for credit, along with the ability to re-run past limit checks for verification.
SSE plc is one of the UK’s leading energy companies with interests in generation, transmission, distribution and supply of electricity; energy trading; the development of major renewable energy projects; the storage, distribution and supply of gas; electrical and utility contracting; data centres and telecoms. It owns and operates over 11,979 megawatts of electricity generation capacity and distributes electricity to 3.5 million homes and workplaces.
The first implementation, to value and optimise SSE’s multi-commodity portfolio of gas and electricity assets and to achieve a consolidated view of risk across its entire portfolio of assets and contracts, was extended in 2018 to provide a complete system for the assessment of credit exposures including credit walk-forward and Potential Future Exposure (PFE) calculations. The management of limits and limit breaches across SSE’s market and credit risk metrics was then added.
SSE are now able to use a common set of market models and contract representations to perform a range of analyses from plant valuations to cashflow forecasting, VaR and PFE. For storage assets, SSE now have transparency into the underlying model calculations and results that was lacking in their previous software solution, providing greater confidence in the numbers making it easier to explain hedging decisions to senior stakeholders.