E-business in Power Generation: OEMs
and Utilities Persisting with Marketplace Strategy
Published: Thursday, 1 November
2001
by Harald Thaler
Our previous article of last week showed that independent
marketplaces in the power generation sector have had
a rocky ride over the past few months or so. In this
second piece on e-business marketplaces in the power
sector we look at developments among marketplaces
that have the backing of specific industry partners.
A key player is Germany-based ec4ec.com which, unlike
its independent rival SourcingParts, was established
by power generation OEMs. The marketplace was awarded
the Frost & Sullivan Market Engineering Award
for E-Business Innovation in April 2001. Since then
ec4ec.com, which is a joint venture between Babcock
Borsig, VA Tech, mg technologies, SAP and Deutsche
Bank, has made good progress in connecting suppliers
and expanding the functionality of its platform. The
company will hold roadshows in seven German cities
during November 2001 to familiarise its target audience
with the potential benefits of collaborative engineering
and e-procurement.
Overview of Key Industry and OEM-Driven Marketplaces
in the Power Generation Sector, 2001
| Marketplace |
Main Service & Focus |
Key Technology Partners |
Status |
| Pantellos |
Procurement & Collaboration |
Commerce One & SAP Markets |
Operational |
| Enporion |
Procurement & Collaboration |
Commerce One & SAP Markets |
Operational |
| UtilityFrontier |
Procurement & Collaboration |
KnowledgeA-Z |
Operational |
| Achilles Online Exchange |
Procurement |
SAP Markets & Requisite Technology |
Operational |
| Eutilia |
Procurement |
Commerce One & SAP Markets |
Operational |
| Trade Ranger |
Procurement |
Commerce One & SAP Markets |
Operational |
| Opciona |
Procurement |
Commerce One & SAP Markets |
Operational |
| ec4ec.com |
Procurement & Collaboration |
SAP Markets |
Operational |
| GEPartsEdge |
Spare Parts Buying and Selling |
Saqqara Systems |
Operational |
| pmsl.net |
Procurement |
just2clicks |
Closed |
The collaborative engineering and procurement marketplace
has even been on the acquisition trail and acquired
the shipbuilding marketplace shippurch.com in July
2001. Babcock Borsig, the leading founder of ec4ec.com,
is itself a leader among power OEMs in the adoption
of e-business. A dedicated e-business subsidiary,
Babcock eBusiness Solutions, was established in June
2001 in order to provide e-business solutions to other
companies, in particular SMEs in Germany.
Utilities also getting in on the act
The energy industry itself has also put its weight
behind a number of e-business initiatives. The Achilles
Online Exchange was the first to achieve operational
status in Europe. Since starting up in June 2000,
the exchange has processed transactions with a total
estimated value of Euro25 million. There are now over
fifty suppliers in the process of having online catalogues
generated and it is anticipated that this number will
rise to between 300 and 400 by 2002. The Achilles
exchange has shown considerable staying power, not
least as a result of the backing of 14 large UK electric,
gas and water utilities.
 |
Now managed
by Endesa and Opciona.com
Much slower off the mark was its continental European
rival Eutilia, which is backed by 12 large utilities
and was incorporated as an independent business in
March 2001. Developments have accelerated in recent
months, however, as the initial disagreements among
the founding partners were replaced by a single management
company. In early October 2001, Opciona.com, a unit
of Spanish utility Endesa and an electronic marketplace
in its own right, won the contract to manage Eutilia.
According to Endesa, the Eutilia exchange has held
more than 250 reverse auctions since its launch in
March, for a combined value of over Euro600 million.
Following a series of test auctions, the first formal
auction was completed in late July 2001, valued at
Euro14 million and carried out on behalf of French
electricity giant EDF. In what is a first of its kind
in Europe, Eutilia is currently in the process of
launching an auction for an entire power plant. The
3x676MW Inverkip heavy fuel oil-fired power plant,
owned and operated by Scottish Power, will be reverse
auctioned either in late 2001 or early 2002, with
the plant being available either complete or on a
component basis.
It remains doubtful whether the auctioning of critical
power plant components, such as turbines, can be successful,
at least if judging by a recent US example. Enporion,
a marketplace serving the purchasing needs of small
to medium-sized utilities, primarily in the Midwest
to Mid-Atlantic regions, recently launched an auction
for 20 used gas turbines. However, even after the
initial pre-registration of 14 potential purchasers,
the actual auction in September 2001 did not produce
a single bid. This disappointing result reflects the
fact that many utilities and power generation still
 |
US based Pantellos
attaining some success
prefer to use traditional channels when it comes to
transactions involving expensive and high-specification
items such as turbines. Rival US marketplace Pantellos
did manage to sell one turbine recently, but this
was not done electronically but by simply putting
the seller together with the buyer, with the actual
transaction done through phone, fax and email. It
remains to be seen whether this kind of auction will
catch in Europe, where there is currently no gas turbine
demand boom.
E-business remains crucial
Despite the difficult market situation facing many
e-business initiatives, it is clear that the leading
players are pressing on with the introduction of e-business
into their respective organisations and the adoption
of collaborative solutions. It is crucial for power
generation companies to persist with their e-business
initiatives as those who take an early lead will benefit
most once the global economy recovers. Putting e-business
plans on hold now would mean that such OEMs and turnkey
contractors would be at a serious competitive disadvantage
to their leaner internet-enabled peers.
Frost & Sullivan conducts ongoing research into
e-business in the European power generation equipment
sector and has published a strategic report on e-business
strategies in this field, the details of which are
located here.
See our related article on
Independent
Marketplaces - Life After the Bubble Burst
