Navigating the Eesti Energia project with a strong partner

In this blog post series Navitasoft will share some of the projects we have worked on together with partners. Back in 2019 Eesti Energia – the largest energy producer in the Baltic region – contracted the consortium of IP Systems (now Navitasoft) together with a leading algo-trading provider to improve energy trading automation and production optimization at the company. 

Most case studies focus on technical requirements and features. In this case, we thought we’d take a different approach. IT projects succeed or fail based not just on technical competence but on the soft skills – negotiation, project management – as well as on the strengths of the people involved. So we asked some of our algo-trading friends to elaborate on their experience working together with Navitasoft.

A journey begins

In 2018, Eesti Energia, the largest energy producer in the Baltic region, was looking for a solution to automate trading on the Nord Pool power exchange, including optimization of trading and production. As a market leader in fully automated energy trading, our partner VisoTech was a strong contender to win the contract, and was quite eager to gain a first algo-trading customer in the region. However, they preferred to deliver standardized, off-the-shelf solutions, yet it was clear that this project would require significant customization. We reached out to them that summer, offering our expertise in customized energy trading solutions. 

Winning trust as travelling partners

“When Navitasoft approached us, we had already been in touch with Eesti Energia about our algo-trading solution. It was an exciting and strategically important opportunity, but it soon became clear that it would go beyond the scope of our standard solution,” shared Jürgen Mayerhofer, then Managing Director at VisoTech. “Navitasoft reached out at just the right time, with an excellent track record of delivering custom software for wholesale and retail traders, as well as expertise in Central and Eastern European ETRM systems.” 

After a few joint meetings, both parties were confident in each others’ ability to deliver, and saw the relationship as a mutually beneficial opportunity.

Eesti Energia’s requirements were very complex. The solution had to support six countries and several market areas on Nord Pool. Besides algo-trading the solution had to cover the optimization of power generation units, scheduling, and had to ensure bid submission on the ancillary services market. The high complexity of the technical solution came along with stringent contract conditions: strict deadlines coupled to high penalties and lack of delivery flexibility. It was an opportunity with a mix of high technical and commercial risk. “We had to find a way to address these with a solid architectural concept, as well as to negotiate the contract terms within the public procurement framework to reduce these risks to an acceptable level. At first this appeared to be an absolute no-go opportunity,” said  Kornel A. Balogh, Head of Business Development at Navitasoft.

“Still, the technical challenge was inspiring. We wanted to do this project or a similar scope. We split up the discussion into two separate threads, one for commercial terms and one for technical realization. To supply the optimization deliverables we also invited Decision Trees GmbH, as experts in advanced optimization for the energy industry, to join our project.” (We will talk about this cooperation in a dedicated article in the near future.) “When it comes to algo-trading VisoTech’s team really knows what they’re talking about; together we could easily demonstrate technical and project delivery competence, and thus propose a solution with a unique technical and architectural approach that would be well suited to solve the customer’s problems.

“The real challenge was to keep everyone at the negotiation table and find mutually acceptable contract conditions.”

Joint bidding: navigating public procurement

Owned by the government of Estonia, Eesti Energia has to contract under Estonian law, which was an unknown legal terrain. At the time, our partners did not have much experience with an Estonian bidding process or with the national and local legal obligations. Since we have successfully negotiated many such projects over the years, especially in central and eastern Europe, we were able to support them through this challenging process.

“It was great that Navitasoft took the lead; they processed and reviewed all procurement materials,” explained Christian Wandl, at the time VisoTech’s Head of Sales. “The bid documentation was practically ready to go, we just needed to provide clearly defined inputs here and there. It saved a lot of time and effort for us – in particular the learning curve. Their experience also reduced our risk and the chance of making mistakes during offer submission. Navitasoft had an elaborate, professional bidding process led by an experienced team.”

Project management: guiding the way to joint delivery

VisoTech had an excellent and highly experienced delivery team, with a deep grasp of energy trading, strategy development and automation. They worked well with our team, helping us to understand the ins and outs of algo-trading. However, the contractual obligations under public procurement meant that from the start, they had to adjust their standard delivery procedures. The addition of an optimization tool from a subcontractor presented additional challenges; the dynamics of software delivery and integration with three suppliers represented new terrain for them. We assigned a highly experienced project manager with more than a decade in the business.

“Navitasoft’s project manager not only demonstrated professional skills in IT delivery and project management, but quickly gained an expert level of understanding on algo-trading and optimization. His competence both in energy trading and project management was impressive,” Christian Wandl remarked. “In spite of the contractual and technical complexities of the project, Navitasoft professionally coordinated and synchronized all deliveries. Their attention to contract provisions ensured that all requirements were properly fulfilled. Last but not least, they did a great job handling administrative provisions, customer communication and related documentation, which led to significant resource savings on our side and allowed us to concentrate on our core competencies.”

“For Eesti Energia the outcome of the project was with strategic value to secure our position as the leading energy trader in the region and offer customers cheaper, smarter and faster solutions,” said Aleksei Toptšilin, Head of Power Trading, Eesti Energia. “The implemented IT systems enable us to significantly automate and streamline trading processes, combining our top-level market and trading expertise with business information technology to ensure more efficient portfolio management for customers with renewable energy as well as conventional production assets and other flexibility service providers. 

“The VisoTech team delivered the timeseries management, scheduling and algorithmic trading software with access to automated strategies, trained our trading team and helped us to navigate and manage features and functionalities of the system. Navitasoft kept the holistic view, and professionally coordinated the project implementation among the many stakeholders in this complex project. They have been a great support to ensure the fulfilment of technical and contractual requirements, as well as managing project related risks in a timely manner. At the beginning of the project one of our concerns was how the VisoTech platform will work together tightly integrated with DTrees’ optimization tool. Now that we have been using the system for several months along the full chain from generation optimization to trading, I am glad to see such a high level of automation brought to life. The system architecture we implemented is complex, we had to modify and develop our in-house IT solutions as well to enable this level of automation. VisoTech, DTrees and Navitasoft had the depth of experience to consult and advise us on the best approaches, as well as to support our further developments and bug fixing. Their agile approach and iterative method enabled a fruitful cooperation.”

The journey continues: a look into the future

Jürgen Mayerhofer concluded, “Navitasoft’s professional team proved to be great partners in organizing the Eesti Energia project, customizing deliverables and managing the customer relationship. I fully share their vision that digitalization, automation and increasingly sophisticated IT systems represent the future of energy and are essential to develop the industry to its fullest potential.”

We at Navitasoft thank our algo-trading colleagues in Vienna for the great teamwork on this project and look forward to continued collaboration in the future.