Customer Success Story – EVN Uses Quantrix to Forecast the Energy Market
Background
EVN is an Austria-based conglomerate that provides electricity, gas, heat, water, waste incineration and related services to more than three million customers in 18 countries. It differentiates from the competition by working on both sides of the energy market – energy generation as well as retail distribution.
Challenge
Back in late 2004, Robert Halbweis, an energy economist and planner at EVN, began looking for a replacement for Oracle Financial Analyzer, which was to be phased out over the next several years. Halbweis’ energy planning group was evaluating a number of enterprise planning and business intelligence tools when they discovered Quantrix. The multi-dimensional modeling and analytics concepts which underlie Quantrix resonated with Halbweis, who had prior experience with the modeling tool ‘Javelin’. He was immediately impressed by the flexibility, transparency and performance offered by Quantrix. As he states, “Compared with Quantrix, our prior solution had significantly less flexibility in maintaining the data structure, formulas and data. It also required long calculation times for each and every update.”
Solution
Fast forward to the present. The energy planning group at EVN has implemented and proven the value of an integrated Quantrix solution comprising Quantrix Modeler, Quantrix 64, DataLink and DataPush. The group uses Quantrix primarily for forecasting an especially complex and fluid business modeling activity in the energy industry. The group forecasts in a broad range of financial domains including energy sales, revenues, and energy purchasing costs. They also forecast the ‘contribution margin’ which is the difference between energy revenues and purchasing costs, and which is a main driver for profitability. The group supports several key business units such as retail sales (electricity and natural gas) or electricity generation (hydro and thermal power plants) with dynamic forecasts that need to be highly accurate. The forecasts are based on 12 months across several years.
Remarkably, Quantrix enables calculations within the planning model, such as the power load forecast and valuation of open positions with the hourly price-forward curve, on an hourly basis. The multi-dimensional nature of Quantrix enables a degree of granularity with the time dimension (year, month, day and hour) that was out of reach with EVN’s previous solution. With a highly volatile market on one hand and consumers and investors demanding price and return stability on the other hand, the Quantrix planning model provides a dynamic risk management platform for identifying and mitigating risk exposure.
The Quantrix solution is integrated into the broader infrastructure at EVN. Using DataLink and DataPush, EVN is able to interface with their Oracle database which stores the consolidated forecast data. They also leverage the scalability and performance of Quantrix 64 for maintaining the historic data generated by the planning models. This allows them to perform variance analysis between forecast and actuals which in turn enables them to fine tune the planning models for continuous improvement.
Results
The value delivered by Quantrix is measured by more accurate and timely decision-making, improved business performance, greater cost savings, as well as enhanced collaboration among business units. Halbweis reports that the cycle for updating a forecast was reduced from weeks to only hours, resulting in better decisions and improved profitability. Indeed, Quantrix enables the group to make model updates and create new analyses within individual planning meetings, which provides unprecedented ‘time-to-answer’ that is critical to making decisions.
The energy market is highly fluid, so the speed-to-insight afforded by Quantrix has a real impact on the energy planning group’s success. One example of how Quantrix enables decision-making relates to the medium and long term optimization of power generation plants. The forward-focused business intelligence derived by the Quantrix planning model informs decisions on whether to shut down a power generation plant over a set period of time such as a weekend. This is done when the forecast spot price per MWh based on the notation of power forward prices is expected to be less than the cost to generate the power, and the cumulative forecasted loss exceeds the cost to shut down and restart the plant.
Halbweis affirms, “The benefits of using Quantrix are numerous. First we get the results we need in a much shorter time period. Secondly, we are able to perform our tasks and make decisions much more efficiently. We don’t have the substantial human resource overheads we used to for maintaining the planning models. To put it more succinctly, we are more efficient – doing more, much faster and with less resources and significantly less cost.”
Summary
Challenge
- Has significantly less flexibility in maintaining the data structure and formulas
- Prior solutions required long calculation times for each and every update
- Significant time investment and resources used in their forecasting process
Solution
- Quantrix for forecasting, especially complex and fluid business modeling activity in the energy industry
- Implemented and proven the value of an integrated Quantrix solution comprising Quantrix Modeler, Quantrix 64, DataLink and DataPush
Results
- Quantrix enabled a degree of granularity with the time dimension (year, month, day and hour) that was out of reach with their previous solution
- Quantrix allows more accurate and timely decision-making, improved business performance, greater cost savings, as well as enhanced collaboration among business units
- Quantrix enabled the group to make model updates and create new analyses within individual planning meetings, which provided unprecedented ‘time-to-answer’ that is critical to making decisions
- EVN is more efficient – doing more, much faster and with less resources and significantly less cost
