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“Maximise PnL, minimise risk”

 

Profit & Loss. This is the key parameter for an originator. To make as much profit and as little loss as possible. “We constantly try to maximise PnL while minimising risk,” says Nikolaus Kramer, Senior Originator. How he achieves this doesn’t really matter. Every originator follows their own strategy. They can execute many small transactions or concentrate on a few large ones.

 

Nikolaus Kramer lebt und arbeitet in Hamburg.

“You can’t really define origination. There are simply too many possibilities. What we definitely don’t do is speculate – we leave that to the traders – as well as the pure sale of electricity,” Nik explains. He views customers more as complementary partners. “Players in the electricity sector, like us, frequently face a variety of conditions that complement or cancel each other out.” Success in the field of origination requires a vast and trustworthy network within the electricity industry, expertise regarding market developments and pricing models, and seamless cooperation with the trading and sales teams. “Nevertheless, this is no guarantee for success,” says Nik and explains: “At the end of the day, the main factor is the price. The person sitting opposite me has the same goals as I do and wants to increase their PnL.”

Over the coming years, we will increasingly focus on PPAs – power purchase agreements – and use them to purchase and market electricity from wind farms and photovoltaic plants. On the one hand, there is a huge potential here due to the politically promoted expansion of renewable energies, but on the other hand, they have also become a necessity. T he transformation of the energy system has ent on having someone else to cover the risks for the electricity they generate. Such plant operators have no trading infrastructure and cannot market the electricity themselves. We offer them a fixed price for the electricity they produce and try to resell it on the market as profitably as possible.

Origination

The purpose of origination is to hedge risks or generate profit using tailor-made transactions with customers and counterparties. It is up to each originator to find the most profitable trades, ensure that the transactions with the counterparties are legally and financially viable, to structure the transaction and to develop a hedging strategy. Currently, our focus is on PPAs for RES plants and PPAs with industrial consumers. This means that on the one hand, we purchase and market renewable electricity as profitably as possible, while on the other, we offer companies electricity and guarantees of origin that we ourselves purchase on the market. In future, the structuring and risk management of such PPAs with a term of between two and ten years will be our main activity in the field of origination.

Discover more (German)

With this model, we not only offer security to new investors and facilitate investments, but also extend the lifespan of existing plants. Namely, those that were operated under state subsidisation in Germany. The subsidies expire after 20 years, forcing the operators to sell their electricity on the free market. According to our own study, in which we examined 12,000 locations, this will affect more than 23 percent of all wind turbines in Germany by 2025. More- over, since repowering is not possible, they are in danger of being decommissioned if their operators cannot find a new form of marketing. “There is currently an increasing number of operators who decide not to seek subsidies and directly enter the free market,” says Nik. “Especially when it comes to photovoltaic systems. The modules have become ever cheaper, and the price of electricity is high. This is why the free market is much more interesting right now than a lower feed-in remuneration.” All these signs promise a solid growth potential. Or as Nik soberly puts it: “Currently, we are doing welll.”