As the European Union, UK and other governments increasingly turn their backs on fossil fuels, businesses steeped in this business are looking to the horizon and seeing a new era of electricity. Royal Dutch Shell Plc is in the process of recruiting as it plans to spend up to $ 3 billion per year on its new energy division, and the Vitol Group is in the process of expanding its trading desk. More electricity traders changed jobs in 2020 than in the past three years combined, according to Oxwich Search Ltd.
“For companies that hire the right people, take advantage of the cheap money and position themselves wisely for the future, there will be real gains to be made,” said Mead, 52, who is in talks on a new one. employment. “Easy Street can be put on the back burner because the opportunity is far too compelling not to be involved.”
Large energy companies are adding power plants, retail customers and car charging networks, and need more staff to help manage these assets. Electricity is a volatile commodity, and traders will try to take advantage of increasing price fluctuations caused by intermittent wind and solar generation.
According to recruiters, the vast majority of electrical traders earn six-figure salaries. For the crème de la crème, the guaranteed compensation for a job change is between $ 2 and $ 3 million. It still drags the salaries of top oil traders, but recruiters say the gap will likely narrow in the years to come, as the now niche business becomes more widespread and attracts more talent.
“We are seeing unprecedented interest in the electricity market and traders,” said Jonathan Funnell, head of gas, electricity and renewable energy at Proco Commodities Ltd., a research firm in London. “Those who are heavy on carbon have realized that they need to be involved in electricity and renewables.”
According to Elchin Mammadov, senior utilities analyst for Bloomberg Intelligence, around 8,744 terawatt-hours changed hands in the European market last year, according to industry consultant Prospex Research Ltd. The market value could then reach more than 630 billion euros (748 billion dollars), he said.
What sets electricity traders apart from their peers in oil, metals or agriculture is the amount of data they need to keep track of – which fossil fuel plants are operating, ever-changing demand, what show technical charts, weather reports and overall power. mixture of generations. Sometimes they operate in multiple markets.
The usual degrees in math, finance, economics, or engineering are helpful, but companies are increasingly looking for candidates with programming skills, including Python. Denmark’s second-largest city, Aarhus, has emerged as a short-term business hub where companies select students straight out of college and train them on the job.
“Electricity markets are so complex that to understand their meaning you have to build big machines,” said Stefan Wieler, head of energy market analysis at the Swiss utility Axpo Holding AG and former Goldman Sachs Group Inc. oil analyst. “It’s very data-intensive, it’s very coding-intensive, it takes time.”
Traders’ attention was put to the test on a calm September 15, when intraday prices hit some of the highest levels on record. What started with a warning from the British grid operator that supplies were low has spilled over into Germany, the Benelux market and Denmark. Prices have skyrocketed as wind farms, the backbone of the fight against global warming, have almost come to a standstill. Oil-fired power plants spewing black smoke were needed to ensure supply.
While wind power production in the UK has fallen by more than two-thirds in a matter of hours, prices have increased tenfold in Britain and 20 times in Germany. And there have been other warnings since.
“Wind is the one factor that really moves the market at all times, and it’s always on our screens,” said Bo Palmgren, COO at MFT Energy A / S in Aarhus. The company recently opened offices in the United States, Turkey and Singapore as the renewable energy market globalizes. Commerce is also at the heart of London-based BP Plc’s commitment to move away from the mainstream. fossil fuels without sacrificing profits. Renewable energy projects typically give returns of 5% to 6%, and traders have on average increased the company’s returns by 2%, said CEO Bernard Looney.
BP, which plans to cut 10,000 jobs amid falling oil prices, will expand its electricity trading over the next five years, increasing its volume each year by about 40 percent to 350 terawatt-hours – about as much as the UK annual consumption.
Like BP, Shell is undergoing a major restructuring which will also result in thousands of job losses. Power is a key part of his short-term strategy. The Anglo-Dutch major, who bought a British electricity supplier in 2018, plans to invest “quite heavily” in electricity over the next decade, CEO Ben van Beurden said. The company will first hire short-term traders for mainland markets and then grow “much more than that” over the next year, David Wells, vice president of Shell Energy Europe, said in an interview this month.
This is a far cry from the beginnings of Mead’s career. The oil trade began in the 1970s, but it wasn’t until two decades later that energy markets began to change. The UK and Nordic markets were the first to open. Germany, now the largest market, followed later. Before its notorious bankruptcy in 2001, Enron lobbied for liberalization.
Initially there were only a few trades per week.
“We used to call it the ‘Hotel California,’ Mead said. “You can register, but it can be difficult to verify.”
He remembers back then the offices were an eclectic mix of number crunchers and foreign language speakers, as local market players rarely spoke English. Trading systems were mostly built in Microsoft Excel, with brokers working on the phones.
Now on-screen trading dominates and thousands of trades are carried out every day.
And in the latest sign of how renewables are entering not only markets but the entire economy, British Prime Minister Boris Johnson this month announced a plan to tackle climate change by creating or supporting up to 250,000 jobs. It follows on from last year’s flagship Green Deal strategy, designed to make Europe the world’s first climate neutral continent by mid-century.
“Climate change and an electric future are reshaping the industry,” Mead said. “The next 10 years suggest massive changes.”
– With the help of Laura Hurst