Danske Commodities A/S, a closely-held Danish energy trader, is taking advantage of growing electricity-price volatility by expanding its operations, even as banks and utilities are reducing staff to cut costs.
The Aarhus, Denmark-based company has hired nine power traders and one carbon trader this year from Barclays Plc, Axpo Holding AG, EON (EOAN) SE, Enel SpA and NEF Asset Management, Torben Nordal Clausen, Danske Commodities’ chief executive officer, said by telephone on Nov. 19.
“The key driver for our growth is still renewables, which are making the market more volatile,” Nordal Clausen said. “We help power plant operators optimize their assets and to do this we need good traders and lots of people in data and IT.”
Renewable power flooding the grid on sunny and windy days has increased price swings in Europe’s short-term markets. This trend is set to continue as the region’s largest energy market, Germany, plans to source at least 35 percent of its power from solar and wind by 2020, compared with 23 percent now.
German day-ahead prices ranged this year between a high of 59.74 euros on Jan 22. and a low of minus 3.33 euros a megawatt-hour on June 15, on the Epex Spot SE exchange. Solar and wind generation rose as high as 32.5 gigawatts on June 15, compared with average output of 5.6 gigawatts over the past year, data from European Energy Exchange AG show.
Power price volatility rose to its highest since at least 2007 in June, according to data compiled by Bloomberg.
The decline in forward power prices because of the growth in renewables output has reduced the earnings of German utilities. RWE AG, the country’s second-largest utility, said in an earnings report on Nov. 14 that profit will drop by almost half next year as power prices fail to recover. EON, Germany’s biggest utility, said that 2013 profit will be at the lower end of its forecast range following a 52 percent slump in nine-month earnings.
EON cut staff at its global commodities unit, the proprietary trading, optimization and infrastructure businesses, by 33 percent this year to 1,468 as of Sept. 30, the company said in its third quarter earnings report published on Nov. 13. RWE (RWE) plans to cut 10 percent of its workforce, or 6,750 jobs, by 2016, the company said on Nov. 14.
JPMorgan Chase & Co. is said to be closing its energy-trading business in Geneva, cutting or relocating about 12 jobs, a person with direct knowledge of the matter said on Nov. 15. This follows Deutsche Bank AG, based in Frankfurt and Bank of America Corp. in shutting some units trading commodities because of tighter regulation in Europe and the U.S. after the financial crisis.
“The whole industry is changing and needs to be adaptable. We can add a lot of flexibility in a totally new environment,” Danske Commodities’ Nordal Clausen said.
Danske Commodities advises some power plant operators when to run in order to maximize profits, Nordal Clausen said. It also sells power on behalf of renewable energy producers and advises on feed-in tariffs and output management, according to the company website.
The company has increased headcount by 73 percent since January to 400 people, from 231 at the end of last year, company spokesman Simon Taylor said by e-mail on Nov. 19. Most recently, Danske Commodities hired in October Igor Ignjic from Axpo Trading U.K. as head of U.K. power and gas.
It boosted profit 77 percent in 2012, according to an earnings report published on April 19. Danske Commodities increased its power trading outside exchanges 178 percent last year as the share of renewable power in Europe rose.
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