Trading: Statkraft a major player in the power market

Not gambling

For an outsider, trading may seem like gambling, but Kvennås rejects that it has anything to do with gambling or chance.

"We act on the basis of thorough analyses, experience and knowledge, but of course there's an element of risk. We make qualified guesses, but we can make mistakes in our assumptions, or unforeseen events can dramatically affect the power market. The market for renewable energy is directly affected by weather and wind, rainfall and temperature. We know quite a bit about normal seasonal variations, but who could predict the war in Ukraine with it's consequences for Europe or that the spring of 2022 would be the dryest period for more than 140 years in the eastern parts of Norway?  We take risks, but we don't gamble."

Statkraft's power trading is strictly controlled by laws and regulations, and restrictions are also imposed on the traders designed to keep their risk appetite in check.

"In general, those who do very well are given the opportunity to take greater risk, while those who do less well and lose money must reduce their risk," says Kvennås. Within this framework, however, traders have a lot of freedom in how they manage their portfolios and position themselves in the market.

­"Some take a more long-term perspective and have a higher tolerance for portfolio fluctuations. Some traders can sit with large positions without trading as often. Others take more risk during the day and reduce risk overnight. The traders also have different focus areas and have the opportunity to trade in energy markets other than the Nordic power market. How to approach the markets is very personal and everyone has to find their own methods for making money. It's important that you find a method that you believe in and that also allows you to sleep soundly at night."

Pressure and stress

There is no question that having a job where you manage large sums of money can be challenging, where you have to watch the value of the investments fluctuate from hour to hour and where you are measured on results every single day.

"It can be stressful, but also very stimulating. That's why we're also concerned about taking care of each other. There's a good sense of community, and we often discuss things together, so no one is left to fend for themselves. At the same time, we're concerned that those who work here also have a life outside of work. Family, friends and hobbies are important to help you tackle the pressure. You can't just sit in the trading room around the clock. Then you won't last long in the job," says Kvennås.

"We have people who have been here for 20 years and think they have the best job possible. But you can't do this for too long if you lose money, and you have to stay up to date, because the market is constantly changing."

Geopolitics and weather

The market for renewable energy is affected by weather and climate, and although the world is facing extensive electrification, both short-term variations and long-term changes have a big impact on power prices.

The last few years have been very challenging with a crisis in the continental European power markets mainly due to the war in Ukraine and reduced gas deliveries from Russia to Western Europe. 

"However, for the trading department, price fluctuations are more important than whether the price is high or low. If we do the correct analyses and assessments, we can contribute to revenues even in periods of low power prices" says Kvennås.

"Personally, I hope to see a peaceful solution in the Ukraine soon. That would take away much of the insecurities in the energy markets and also reduced the extremely high prices we've seen. After a while we would then from Norway have a more balanced power exchange with the rest of Europe and profit from some unique traits in our hydro power based power production" says Kvennås.