Kalahari kACE Energy

As the energy markets continue to expand and liberalise across the pan-European market place, the need for accurate and proven pricing and analytical software is growing at an exponential rate. Traditionally, most software providers have catered for the energy markets on an individual product by product basis, but now with the need to understand the correlation between the various product lines within the energy markets, technology companies are having to re-address the needs of their customers and markets.

kACE Energy - The future

kACE Energy is a fully functional pricing and analytical system based on Kalahari's flagship product kACE.

kACE Energy was initially created to aid and facilitate power generators and trading companies in their trading strategies and risk assessment for the UK power market. Since then kACE Energy has expanded to cover power and gas markets around the world, with weather to follow very shortly. As with the original kACE system, the kACE Energy analytical environment offers unparalleled adaptability and flexibility in its approach, which allows users to incorporate their own risk algorithms. That flexibility also allows Kalahari or the user to build a bespoke intelligent risk environment that can cover multiple interdependent product lines at a fraction of the cost of other systems.

Order Board

kACE Energy has an electronic Whiteboard order system capable of taking either manual or electronically delivered orders from brokers or exchanges, with the functionality to show the best price on any period or loadshape. The Whiteboard includes arbitrage functionality to imply best price for any period or loadshape within a number of markets, including UK electricity. Incorporated within the system there is a fully integrated spread matrix taking prices direct from the Whiteboard order system and implying prices across loadshapes, periods and markets.

Curve Generation

With market prices available for multiple overlapping forward periods and various cyclical demand patterns, the problem has always been to obtain consistent curves from which prices for generic forwards, options and other derivatives can be found. kACE Energy achieves this by combining established methods used in the financial markets with those bespoke to energy. Curves generated are accurate for both short- and long-dated periods and are consistent with the live prices obtained from the Whiteboard.

This allows users to accurately price any standard or non-standard period in a "Real Time" environment. The forward pricing curve for any market can be produced and maintained on an individual user's terminal and then "shared" across a network for all other users, allowing a uniform pricing methodology.

Modelling

Within kACE Energy there is a fully functional modelling environment that provides comprehensive tools for the pricing of single or multi-leg option strategies across all periods within any of the markets covered. Daily Options are also handled efficiently. Incorporated within the option environment is the capability to interpolate/extrapolate volatility smiles combined with an intuitive price feed from the relevant curve.

kACE Energy will fulfil a client's need for an open architectural environment that can encompass all the relevant energy product lines - UK, Continental and US power, natural gas, oil and weather.