Trading & Optimization (T&O) is the commodity trading unit of STEAG. It markets the energy from STEAG power plants and procures fuel and emission certificates. The unit is headed by Dr. Stephan Riezler (Front Office) and Verena Sievers (Back Office). In the interview they talk about what is required of commodity trading staff, the significance of STEAG’s own assets and the future of the unit.
Do you have to be an engineer to work in your unit?
SR: We do employ engineers, of course, but likewise business graduates, mathematicians, lawyers and IT experts. What made you think that?
Your unit not only marketed STEAG’s large-scale battery systems, it also planned and developed them. That's rather unusual for a classical trading unit.
VS: True, but there again we’re not just a classical trading unit. Our strength lies in providing tailored solutions to complex issues at the interface between market and technology. Our staff therefore not only need to have an understanding of technical matters, but also knowledge of the market and, of course, appreciate the mutual dependencies.
Speaking of dependencies, you market the STEAG power plants. To what extent do you as a unit depend on coal-fired power plants, and do they have any future in Germany?
SR: As a trading unit, we’re not restricted to one single technology or a specific country. Having said that, marketing STEAG’s coal-fired power plants in Germany does play an important part in our portfolio. That’s why we, too, have had to react to power plant closures. Although the significance of renewable energies in power generation in Germany will continue to increase, we still see a need for flexible and efficient coal-fired power plants for many years to come. Our power plants guarantee a reliable and affordable power supply. At least as long as it’s not possible to ensure economically viable storage of the fluctuating volume of electricity generated by wind and photovoltaic systems for at least two weeks - what’s known as the ‘dark doldrums’, when there’s no wind or sun. What’s needed here are new technologies, and although research is underway, implementing these on an industrial scale is not yet on the horizon.
What does this development mean for your unit, how are you dealing with it?
SR: We want to expand further. To that end we’re placing the emphasis on managing further power plants both in Germany and abroad. Over the course of the past two years we have added two large STEAG wind farms in Romania and Turkey, 90 MW large-scale battery storage and two waste to energy plants in Germany to our portfolio. This year the focus is on marketing the capacity of our coal-fired power plants in Turkey and Colombia, where long-term power purchase agreements are coming to an end. We’re also working on a new combined cycle power plant in Herne, as well as other applications for large-scale storage systems both at home and abroad. If renewable-based plants are going to have to face up to the challenges of the competitive market in future because of fixed feed-in tariffs expiring, we see great potential there in the long term as well.
That sounds like a broad spectrum. How would you summarize your portfolio?
VS: We see ourselves as an asset-based commodity trader. Asset-based because we have our own plants which we know and operate. We can do far more than simply trading in electricity or other commodities. We look at the entire value chain from fuel through to the marketing of electricity and heat, and provide impulses for investments, for instance to make the power plants more flexible or to enable the use of difficult but less expensive fuels. We also seek out possibilities for new investments, such as the large-scale batteries and the planned combined power plant in Herne. In areas where we are strong, we perform services for third parties, for example in coal trading and providing operating reserve. In short, we provide individual solutions for STEAG and our clients at the interface between market and technology.
What about your interfaces within the STEAG Group?
VS: We work closely with a wide range of STEAG units. Existing local organizations are of invaluable benefit to us on entering foreign markets in getting to know the local rules, practices and important market players. Belonging to STEAG means that we can offer integrated, one stop solutions starting, say, with engineering, through approval, development and financing, all the way to operation & maintenance and marketing. The large-scale battery systems are the best example of this.
Can you expand on that?
SR: We identified the market potential of large-scale battery storage systems early on, and invested more rapidly and extensively in these systems than many other market players. This worked so well because, among other things, we have vast expertise internally as well as strategic and reliable partners.
How important are foreign markets for you?
SR: Foreign markets are definitely becoming more important for us. We’re concentrating initially on the countries and markets we know, or where STEAG already has plants which are not or will not much longer be marketed by power purchase agreements. Particularly in the case of large-scale battery storage we can also envisage expanding into other countries given the right basic conditions, ideally in cooperation with local partners.
It looks like the intention is to position T&O as a global player in the long term?
VS: That’s going a bit too far. At T&O we have to look at global developments. Commodity markets are either global markets, for example oil, gas and coal, or – even if they’re regionally confined like electricity markets – they’re still strongly influenced by global markets. STEAG isn’t big enough to deal with all parts of the world itself though. That’s why we have a regional focus. This makes long-term strategic partnerships with globally positioned partners like banks, producers, shipping companies, trading companies, and, as we said earlier, strong local partners, all the more important for us.