Job at time of interview: Senior Structuring Analyst, Twin Eagle Resource Management
My current role at Twin Eagle Resource Management is centered on modeling and forecasting for both the wholesale power and retail power desks. On the wholesale side it includes the modeling and valuation of long-term structured contracts and hedges. This usually involves using Monte Carlo simulations, variants of mean reverting stochastic processes, power plant dispatch/revenue models, multi-asset spread option models, and a bit of non-linear optimization. The retail power side additionally includes load forecasting, hedge structuring and building automated reports. I think what makes my work both interesting and challenging is the steady stream of new problems. I don't ever find my work mundane, and sometimes juggling multiple projects simultaneously can be quite challenging. Obviously, analytical and problem solving skills are a prerequisite for the work that I do. Beyond those, I think that mastery of the tools is essential. Most energy companies, including mine, use Excel and some form of SQL relational database management system. As an analyst, you usually have to find, clean and organize your own data, build your own models, and build and update your own reports. These things become much easier if you are a master of Excel and can program with VBA, T-SQL, and PowerShell.
Coming out of school with a mathematics PhD, I couldn't speak the language of energy. However, I had strong math, programming, and problem solving skills, along with an infinite appetite for learning. I was very lucky to be mentored by Davis Edwards at Deloitte, where there was a culture of learning and continuous self-improvement. I quickly realized that nothing is "textbook" in energy, and understanding how things worked at a fundamental level was the key to becoming a successful modeler. The ERP exam was perfect. It covers the entire spectrum of the energy world and highlights the fundamental relationships that influence the markets.
Be prepared to work with big data, because it is everywhere and it's getting bigger. Read as much as you can about the industry in books and white papers. This will help you get familiar with the language, market structures, and major players in the industry. When you get that first opportunity, you will be able to get up to speed much quicker. Don't underestimate how valuable it is to be fluent in the language of the energy trader. On the other hand, getting practical experience building and testing models is difficult, because most of the data needed is proprietary and expensive. However, the U.S. Energy Information Administration (EIA) publishes a great deal of free data on their website that may be useful for experimenting with model building and statistical analysis. They are also a great resource for general market news and long-term trends.
We all need energy, and everyone benefits from efficient markets and grids. The energy industry offers virtually unlimited opportunities and is full of great people.
The trading floor was the biggest challenge initially. At Deloitte, I interacted with a high volume of internal and external clients, but mostly over the phone. Our office space was relatively quiet, since many of the auditors and consultants were usually on the road. We had a fantastic view, and there were white boards where we could gather to discuss methodologies over coffee. In contrast, at Twin Eagle I sit on the trading floor. It is one warehouse-size room full of big-screen televisions, walls of computer monitors, and boisterous individuals sporadically yelling out market news or prices and giving high fives. It takes some practice to ignore the noise and movement and focus on your work.
A typical project involving a structuring analyst would be an energy management agreement with a power plant. This type of agreement is basically a power plant rental agreement where the energy manager (the renter) is responsible for a) fuel procurement and delivery; b) turning the plant on and off to dispatch to the grid; and c) selling the power produced into the market. The valuation typically involves forecasting power and fuel prices, estimating the plant's fuel costs and power revenues (taking into consideration plant parameters such as start-up costs, minimum down times, maximum number of starts, etc.), estimating any borrowing or collateral costs, and estimating any cash flow, price and market risk. One of the more challenging projects I have encountered involved retail load forecasting. Tens of thousands of customers, ISO assigned load shape profiles and 15 minute interval smart meter data for each of them, and the realization that everything really depends on temperature, humidity and customer access to distributed generation or demand response capabilities.
The toughest communication challenge is explaining a highly complex model in a meaningful way to relatively non-quantitative stakeholders, in order to give them confidence in the results. I have found that people want to know the limitations and risks inherent in a model and how they affect the final answer. To develop my communication skills, I try to talk about my models and computer code as much as possible. While preparing for my dissertation defense, I occasionally forced my dog to sit through a detailed explanation of methodology and program implementation.
I'm more efficient, because I can see the bigger picture and make more connections. When working with market experts -- i.e., traders -- I can quickly understand what they are talking about; not just how they are analyzing an opportunity, but also why.
I was new to the energy industry and wanted to learn as much as possible as fast as possible, so studying for the ERP was perfect. And because the ERP Exam is comprehensive and challenging, earning the certification is measurable proof that I achieved an industry-defined milestone.
The exam is hard. It does not just test your knowledge of facts, but also your ability to use those facts to solve problems. Take your time and really learn the material; it will serve you well in your career.
I've had several mentors and I thank them for everything they have done for me. Sometimes it's not just about how to do a job, but how to do a job right. Mentors can teach you things like that, and they can help you build a solid network.
I look forward to the local chapter meetings. I find the conversations and the presentations interesting. I also think the ERP certification stands out on my resume. I think it potentially gives me a higher than average chance of getting an interview, and it has prepared me to talk intelligently about complex energy industry topics during the interview. It is important to me to be an active member of this professional association because it demonstrates a standard that we want other professionals in the industry to notice and aspire to.