Internal Communication Strategy and the Trader-Plant Manager Relationship

Whether analyzing risks or considering a power purchase agreement, an effective internal communication strategy is integral to adding value by improving plant/fleet coordination and operational decision-making. At the heart of the communication strategy is the key relationship between a power plant's trader and plant manager.

Attempts should be made to establish the most effective communication between the two, both electronic and face to face. The trader and plant manager should be sitting down regularly to discuss key issues to ensure optimum commercial performance. These include developments in both power and feedstock markets, in order to maintain the best plant configuration and to make the best output or fuel switching decisions.

They should also discuss critical underlying issues, such as evolving regulations, by, for example, setting aside time, where they can talk at depth in relaxed surroundings. Face-to-face meetings should also be set up to review other relevant issues, such as competitor behavior, alternative output options, and longer-term maintenance schedules, which should be carefully planned around trading strategies.

Smooth Operator

Beyond agreeing on the general trading strategy—likely to be determined by the fuel type, risk appetite, and size of plant—at the heart of the trader-manager relationship is the need to synchronize operations with the plant's trading position. This task has been made immeasurably easier by the introduction of digital technology, notes Eka. Today's digital tools automate parts of the interaction, allowing for a smoother, constant flow of information, and quicker, more systematic responses. This helps plants competing for energy sales respond more quickly to market signals, improving profitability.

The best cloud-based digital systems collect and analyze data as well as improve communication, and can also link in operations, allowing the maximum level of coordination and automation, while providing improved analysis for traders and operators, along with more time to discuss underlying issues and deal with higher-value tasks.

With constant updates on the operational limits of the plant, traders can more easily adopt positions within a set of achievable parameters. Unplanned maintenance requirements should be communicated as early as possible, and traders need to provide input on timing when appropriate. This collaborative approach could help minimize potential losses due to a maintenance outage or even boost the profitability of another part of the fleet.

For some companies, a flatter organizational structure helps make decisions more of a team process at the plant level, involving managers as well as traders. This flatter approach is better suited to the decentralized power network model, where power plants tend to be more isolated and able to make individual decisions.

When the Wind Blows

With certain types of renewable plants, obligatory offtake in many developed countries means plant managers don't need such a close relationship with traders, as they produce only when the wind blows or the sun shines and have no need to respond to market signals. This is unless they stop producing in response to negative price signals, as has been the case recently in markets including the UK and Germany.

Hydro, on the other hand, is perhaps the most sensitive to market signals, especially pumped hydro. That's because the decision to use it depends very much on the difference between power prices at the peak of the market when revenue is earned, and the bottom, when cheaper power must be consumed to replenish capacity.

If plant managers and traders don't have an effective internal communication strategy, plant configuration and operational levels may not be able to respond to trading strategy effectively. This leaves plant managers unable to synchronize operations with market position, which will eat into the effective, profitable and safe operation of a plant.