Net-zero transition increases the need for good data on energy sources
Treasury teams across the energy sector need to make better use of data if they are to make sense of a market that is becoming more complex.
Energy price volatility has shot to the top of many corporate agendas. The situation in Ukraine only serves to emphasize the critical importance of energy strategy. Despite concerns over the impact of war in Europe on energy supplies, energy companies must also devise strategies for net-zero carbon emissions amid the volatility.
This development creates a challenging transition period between investment and return. Renewable energy projects are often valued on expected future earnings, while traditional energy sources are valued on their ability to pay dividends in the near term.
This is forcing companies in this sector to make greater use of trade solutions such as bills of exchange, as well as supply-chain financing and portfolio-driven accounts receivable structures – solutions extensively used in other industries to support the working capital cycle, but not as often seen in energy.
As we transition to a clean-energy economy … there isn’t going to be one single source that works for everyone
From a forecasting perspective, treasury professionals must monitor price changes and geopolitical events that could impact supply, as well as the implications of the energy transition in terms of factors such as state support and carbon offsets, says Christine McWilliams, global head of commodity and energy trade at Citi.