Alpiq launches EFET's electronic Settlement Matching on Fidectus’ GEN

Alpiq is a leading Swiss energy services provider and electricity producer in Europe. Their large product portfolio across electricity, gas, emissions, and derivatives lets them tailor energy trading to their client needs. They provide flexible market access to, exchange-based and over the counter (OTC) European energy trading.

Alpiq's story begins with their leadership identifying challenges and inefficiencies with the industry-wide legacy OTC settlement process between trading partners. Traders still send and receive invoices for complex physical and financial contracts via email, pdf or even paper. Reconciliation is cumbersome and manual intervention is required frequently. This causes operational risks, long settlement cycles, increased credit risk and limited flexibility in liquidity management. It became clear to the leadership that change was required. But instead of continuing to fix the symptoms by automatic handling emails and PDFs via OCR and artificial intelligence (AI), the root cause is identified and the need for an electronic standard becomes obvious.

Alpiq offered its industry knowledge and experience through active participation in the European Federation of Energy Traders (EFET) Business Process Optimization Committee (BPOC), resulting in a new industry standard for electronic Settlement Matching (eSM) in April 2019. The standard comprises electronic data exchange and industry-wide business rules.

 Alpiq understands that the rapid market adoption of eSM brings value not only to Alpiq but also to all its counterparties. Therefore, vendor selection includes evaluating the ease of onboarding, vendor's commitment to eSM, and long-term vision. In addition, technology must represent the best practices in use today. Recycling legacy technology is not an option. Alpiq understands it would connect to Fidectus via APIs as part of its fully automated workflow but recognizes the value of the Fidectus platforms’ native OCR and email for counterparties at a different juncture on their digital journey. In early 2022, Alpiq transitions to productive eSM usage via a native interface between their settlements system of SDK GmbH and Fidectus’ Global Energy network (GEN) marking the end of its legacy semi-manual post-trade workflow.

As a result, Alpiq dramatically improves its OTC post-trade settlement process. The solution exceeds the established minimum business goals defined while scoping the project. Table stake business improvements include automation, transparency, and scalability of the settlement workflow, reducing required time, operational costs, and eliminating potential errors.

Lorenzo Celio, Head Back Office Coordination said “It is amazing seeing the first invoice reaching Fidectus platform in 1 second and be sure that the invoice flows to the customer at the same time, without sending emails and with a great audit trail.”

“Fidectus solution as well as experience was of great support for us when moving from a manual wholesale energy settlement process to a fully digital and automated one.” said Henriette Anzböck, Head of Back Office.

OTC invoices and shadow invoices now flow electronically from Alpiq to its counterparties. The project is successful partly because of Fidectus’ technology and the great support to Alpiq, but the collaboration of stakeholders from IT, back office, accounting, and treasury provided the business expertise to define the requirements. The timing could not be any better as we see increasing energy prices. Alpiq now has the flexibility in its electronic process to adjust payment terms as needed bilaterally. The foundation for enabling tools not available before is established: Fidectus’ GEN enables Alpiq to manage their credit risk and optimize their liquidity management even better. An exciting new era for treasury and accounting in energy trading is just beginning.