Danske Commodities Boosts Power, Gas Trading as Volatility Rises

Danske Commodities A/S, a closely-held Danish energy trader, boosted the volume of electricity and gas it handled last year as increased wind and solar power production made prices more volatile.

Power trading rose by 30 percent from a year earlier while gas climbed 65 percent, Torben Nordal Clausen, Danske Commodities’ chief executive officer, said by phone today. Net income rose 12 percent to 243 million kroner ($45 million) as revenue climbed 54 percent to a record 14.4 billion kroner, the Aarhus, Denmark-based company said in a statement.

Renewables production in Europe has jumped 39 percent since 2010, according to Danske Commodities, which can create price swings as power supplies vary with the weather. Companies invested $124 billion in solar and wind energy in Germany, Europe’s biggest renewables producer, in the past five years, data from Bloomberg New Energy Finance in London show.

“Germany still has huge potential, it is a well-developed market and there is huge need for managing volatility,” Nordal Clausen said. “We see this trend of more renewables coming into the market will continue and you will keep seeing more volatility.”

Danske Commodities is mainly focused on short-term markets with 75 percent of trades settled within 48 hours in 2013, and holds no physical assets. It processes data each day about solar, wind and hydropower production and consumption to advise electricity generators on when to produce power.

Power Trading

The company’s revenue from power trading rose 47 percent to 10 billion kroner in 2013, while sales from buying and selling gas climbed 75 percent to 4.4 billion kroner, it said in the earnings report.

Danske Commodities’ assets under management climbed 84 percent to 4,100 megawatts, with 3,500 megawatts from renewable energy, it said in the statement. The number of customers and counterparties rose 70 percent to 550 at the end of 2013.

“We are working with German car producers to optimize how they purchase energy,” Nordal Clausen said, without providing details. “We can do this for different kinds of big industrial companies, and it’s an area we see huge demand and expect to grow.”

Danske Commodities, which buys and sells power, gas and emission permits in 33 countries, will focus on Germany, the U.K., Scandinavia, Benelux and Turkey this year, Nordal Claus said. It opened offices in Hamburg and Turkey last year when it almost doubled its staff to 192.

“Our strategy for the next three years is to do more business at a lower marginal cost,” he said. “We’re going to slow down in respect of hiring people and get more from our investment in IT and people.”

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