In this first installment of the Princeton University Energy Alumni Interview Series, we interview David Green '03, Head of Trading at Xcel Energy, and Leland Baldwin, '14, Technical Specialist at Ecova.
JPM: Tell us about what you did at Princeton. What was your senior thesis about?
DG: I majored in ORFE with Certificates in Finance and Engineering Management Systems. On campus, I was on Club Lacrosse and a member of Ivy Club. My senior thesis involved building a Black Scholes Spread Option model of correlated equities to apply to Employee Stock Option valuation. Surprisingly enough, I do use some of that theory when evaluating Spark-Spread Options between power and natural gas in my job.
LB: I was MAE with a certificate in Sustainable Energy. I was a member of Greening Princeton and other similar groups focused on sustainability as a whole. I also played club soccer and was a member of the rock climbing team. My thesis was about computer modeling of soot formation in turbulent flames - we were trying to improve computer modeling for the design of more efficient engines.
JPM: What’s your current job title?
DG: I’m Head of Energy Trading at Xcel Energy. I manage a team of Traders and Analysts evaluating North American Power and Natural Gas markets - making speculative trading decisions to generate revenue, and providing corporate customers commodity price risk management solutions in the wholesale energy markets. On a proprietary basis, we trade power, gas, renewable energy certificates, emissions and some oil, coast to coast across the US, as part of Xcel Energy’s Commercial Operations division that supports the Regulated Utility.
At Princeton I studied financial derivatives, microeconomics, statistics, probability and optimization under uncertainty - all directly applicable to what we do on a daily basis trying to extract revenue from the energy markets. Commodity markets are just microeconomic price systems where physical fundamentals of energy supply and demand are the primary drivers of price formation. As for power and gas energy market acumen, I picked that up 100% on the job, through learning and reading. That was after I landed a job out of college in the Commodity Trading Strategy division of a global macro hedge fund.
LB: My current title is Technical Specialist. I have also been a Project Engineer, Program Manager, and Engagement Specialist. I work for a company (Ecova) in the energy sector. My part of the company uses data analytics to derive actionable insights from building's energy consumption data. Basically, we do virtual energy assessments.
JPM: What has your overall career path been like?
DG: I have been involved in energy derivative trading since graduation. I developed this niche expertise, had some early success with it, and have been lucky enough to have made a career of it to date. I’ve primarily made job changes due to geography - starting in Chicago, moving to energy job hotbeds like Houston, and eventually coming to Denver to put down roots with my family.
LB: When I graduated, I started working for Energy and Resource Solutions (ERS) as a Project Engineer. ERS is an energy efficiency consultancy firm specializing in measurement and verification of utility efficiency programs. We would design and implement evaluations of past efficiency programs in order to inform the utility companies how effective their previous programs had been and how to improve them for the future. We also did a number of direct industrial energy audits where we would visit a facility and use our engineering expertise to make recommendations to improve upon their systems from an energy standpoint.
After almost 2 years at ERS, I moved to a company called Retroficiency (since acquired by Ecova). Retroficiency is still in the energy efficiency business, but we focus on targeting which facilities in a utility's portfolio of buildings would benefit the most from having an engineer come on site and perform an energy audit. In terms of the timeline of an energy project, I moved forward in time to before the project is implemented while I used to work mainly with facilities that already had the efficiency upgrades.
I switched to Retroficiency because I think I have the potential to have a greater impact in reducing building energy consumption working with them and this model than I could have while at ERS. Plus, I can now bike to work (our office is in downtown Boston), which is infinitely better than my 35-minute car commute to the ERS office.
JPM: In what ways did Princeton prepare you for your career?
DG: It gave me a framework to think about the world as a distribution of outcomes, and a good mathematical background that I can use to make risk-adjusted decisions. The liberal arts courses I took definitely helped to round out my intellect, and made it easier for me to work with and lead others.
LB: Engineering, particularly mechanical engineering, is about problem solving and energy flows. I still use the foundational knowledge I gained at Princeton. I apply it to building specific systems (HVAC, refrigeration, lighting, etc.) to figure out how to best model, interpret, and improve each of system.
JPM: What’s the most surprising thing about energy that you have learned about since graduation?
DG: How the energy markets are constantly evolving and becoming more efficient. How new disruptive energy technology is lowering costs and unseating incumbents in competitive markets (e.g. fracking to unlock lower cost hydrocarbons, subsidized wind and solar generation, and increasingly efficient combined cycle natural gas generation technology). How volatile mother nature can be and how it impacts Energy Markets through supply and demand (e.g., Hurricane Katrina, Polar Vortex, etc and impact on natural gas and regional power markets).
LB: I think the most surprising thing I’ve learned about energy is how many different types of jobs and companies and roles there are within the field. You can have any sort of day-to-day experience and expertise, and bring that to a company to help towards the overall goal of reducing our current dependence on fossil fuels. There are so many companies that fit into every possible niche that I keep learning about more, even having worked in the industry for over 3 years.
JPM: What’s something in energy that currently excites you?
DG: Battery storage is used to balance and smooth wind and solar over the course of a day as energy needs shift. Is it scalable? I’m curious about any solutions which could help with power ramping to balance the market and ancillary services on the grid in the face of the growth of renewable power supply, which is volatile hour to hour. What can replace fossil generation, to balance renewables, that would actually be scalable and economic in current power market constructs?
LB: One is that major companies that were historically dependent on fossil fuels are now developing their renewable resources. Our parent company, Engie, a French-based company, has set some pretty high goals towards cutting out fossil fuels from their fleet of generation and promoting renewables and alternatives. It gives me hope that even without federal guidance, private companies see the future and value in renewables.
JPM: Any advice for current students? And what about for students here who want to get involved in energy?
DG: Princeton is fun! Make it a priority to enjoy your time there. Career-wise, don’t undervalue time spent Networking and make sure you constantly invest in building genuine connections. If you are interested in energy finance specifically, I would be most interested in Energy Private Equity at the moment - that is where the capital is flowing towards, and where the most interesting things have been happening.
LB: If you want to get into energy, there is definitely a place for you. You may not find it right away at your first job, but as you learn more about the industry and develop context and understanding, you can move towards a job that fits your interests and talents. Always keep reading about the industry because it is a fast-paced game - utilities are notoriously slow, but many private companies are doing things on a much faster scale.