Record gas, power and carbon prices in Europe and the threat of an energy crisis this winter highlight the need for specific skills to navigate supply risks. In the US, demand for trading talent is driven by the imperative to face electricity transmission failures, amid a wider pool of power sources and the possibility of extreme weather conditions.
Tight supply is expected to continue to affect the European natural gas market throughout Q3 and going into Q4. There are three main issues at play, according to S&P Global: low stocks following last winter’s harsh weather, Gazprom’s reluctance to pipe more gas via Ukraine, and high Asian demand for LNG cargoes.
As Bloomberg reports, supply is becoming constrained just as demand is returning to the market. This is happening after the usually quiet summer season and as European economies start to ramp up as pandemic-era restrictions are relaxed.
This situation is likely to cause a price shock in both the European natural gas and power markets this winter. Carbon prices will also be driven higher as demand for credits rises in line with the need to bring more carbon-intensive generation online to meet demand.
Trading houses, utilities and majors across the gas, power and carbon trading sectors have seen large P&L boosts in this environment to date. HC Group continues to see huge demand for talent right across these markets and, as a result, recruitment has become a lot more competitive. When combined with the uptick in trader bonuses due to the P&L boost, organizations are forced to pay large bonus buy-outs to attract new traders and analysts from within the sector.
Recruiters’ ability to stomach large bonus buy-outs is also currently a key factor in the Americas markets. Power trading skill sets continue to be in huge demand with both existing companies and new entrants to the market looking to build stronger teams.
Tesla, for example, is believed to be building an energy trading team around its battery and renewable energy projects. A LinkedIn job post by a Tesla employee, spotted by Reuters, said the company is looking for candidates with “expertise in wholesale electricity markets”.
More generally, a lack of proven talent in the Americas markets means that HC Group has seen demand for traders covering all regions and product-types. In the US, FTR traders remain the most in-demand type of recruit. The increasing volumes of variable resources coming online in the US, alongside a series of extreme weather events, have highlighted weaknesses in the nation’s transmission infrastructure. As a result, companies need to strengthen trading desks with recruits that have experience navigating transmission issues and congestion rights.
Demand for talent in the gas market is lagging that of the power sector and is currently driven by large asset owners such as liquified natural gas (LNG) platforms. Overall, knowledge and experience of carbon and renewable energy remain among the most coveted skillsets, particularly as oil and gas players continue to pivot ahead of the energy transition. The latter has continued to be one of several major themes in these markets, that have carried over from Q2 2021 as discussed in our last quarterly review.