power

Trading Electricity in U.S. Power Markets to Deliver Uncorrelated Returns

Our three electricity hedge fund managers have forged unique access and connections to the fragmented U.S. electricity market. We use our distinctive expertise to secure returns completely uncorrelated to the S&P 500 and other common markets.

e360 Power Hedge Fund has been Trading U.S. Electricity Since 2009

The sheer experience of our traders – 70 years among the three of them – underpins the success of our power trading hedge fund.

Expertise, connections, and years of experience are especially paramount in this industry. While the U.S. electricity markets are open, their complexities and intricacies keep less-experienced traders away. Because electricity cannot be stored at a wholesale level, supply and demand must always be balanced in real-time, leading to electricity markets having a very different design compared to common capital markets. Our energy hedge fund trading team is extremely well-versed to these complexities, which they leverage to secure uncorrelated returns.

Unique Features of Power Markets

Coals are going offline and there’s a need for new sources - solar and wind. This fact reduces the reliability of the grid so it’s worth pitching it as an opportunity for investors to participate.

Fragmentation

Electricity markets are fragmented and managed by Independent System Operators (ISOs), who oversee the day-ahead and real-time market for electricity. ISOs will perform power plant dispatch and real-time power balance, as well as act as exchanges for trading activity.

Locational Marginal Pricing (LMP)

An LMP is the cost of providing another megawatt of power at a given location on the grid. This price is the function of the cost for a generator to produce one megawatt of power at the plant + cost of losses while transmitting the electric energy + congestion costs on the grid.

Power Generation

Electricity can be generated through combustion of coal and natural gas, through nuclear reactions, or through renewables such as wind or solar. As more coals are going offline and more wind and solar resources are being utilized, there will be a reduction in grid reliability, which presents investment opportunity.

Electricity Markets We Work With

PJM

Ercot

MISO

ISO New England

New York ISO

California ISO

Instruments & Focus

Our power trading hubs focus on North American ISOs (Independent Systems Operators), primarily in the ERCOT and PJM ISOs. The e360 portfolio consists only of exchange-cleared contracts, so we eliminate internal valuation methods and counterparty risks.

Talk to our Power Investment Experts

Our energy hedge funds trading team would be excited to talk with you. If you’d like to learn more about the U.S. electricity market and its uncorrelated returns with the S&P 500, please contact our power investment manager today.