Perspective: A trader's view on why client-side energy expertise has become critical
June 2, 2023 | Matt Brown
With fifteen years in the power markets, the only real constant I have seen is change.
I had a front row seat for the 2008 credit crisis, the subsequent capitulation of the power market and the liquidity fallout from the resultant Dodd-Frank Act. The ever-changing weather picture presented “bomb-cyclones”, “polar vortices”, “sudden stratospheric warming events”, freezing rain and hurricanes.
The shale-gas revolution, the phase-out of coal and the rapid build out in renewable capacity overhauled supply stacks across North America. Market expectations for natural gas have evolved from being in a $2.00 gas environment in perpetuity - to the record gas and power volatility of the past 18 months, to a current state of storage surplus, for now…
Energy is like an ecosystem and is constantly in search of balance. Inherent in the nature of electricity, this is particularly true, as the intersection between demand and supply continues to fluctuate on an annual, daily, hourly and minute by minute basis.
As we seek to bring more renewables online, in conjunction with large industrial loads and increased electrification, this quest for balance has never been more pronounced. Renewable developers have to balance imperfect hedges with their need for financing. Large loads have to balance ‘up-time’ with participating in demand response programs and ancillary services. All the while, increased intermittency continues to drive volatility and uncertainty, while severe winter storms or hot summer days now present risks that are (or should be) occupying board-level agendas across North America.
As we navigate this energy transition, there are now vast opportunities for companies to leverage the wholesale power markets, to achieve their corporate goals of de-risking their energy exposure or unlocking hidden margins from their assets, by actively managing around their energy risks.
It is a vast opportunity that we all collectively need to solve and this is why I am so excited to have made the move to the client side. While I am clearly biased, I believe with our mix of innovative technology, data and a dose of old-school experience, we are uniquely placed to capitalize, while walking side-by-side with our clients. No need to take my word for it though, just ask around and see what our clients have to say about us!
If you have questions on how the evolving energy landscape is going to impact your business or you are eager to explore how an out-of-the-box energy trading arm could help lower your risk or add additional margins, feel free to reach out to me at matthew@cwpenergy.com
