Q&A: US Power Trader (Prop/HF)

I worked at a research firm before I got my first trading seat, but I've had a number of colleagues over the years who came from utilities/asset owners. The path of RT -> DA/RT -> Cash -> Term still holds true for a lot of traders, especially those who choose to go the utility/asset owner route, but for speculative trading I've found that more and more shops are hiring out of grad/undergrad, especially those who lean on the quant side. 

It's a pretty small sample size, but I've noticed that those making the jump from trading around an asset to trading pure spec struggle more than someone starting fresh, just incredibly different trading styles. 

1. I traded both East and ERCOT in my career. Right now East is my favorite, just so much opportunity across the markets. I'm really excited for some of the developments in the West, particularly whatever "West RTO" pops up in the next 3-5y. 
2. Haven't traded physical. From talking with coworkers who have traded physical I do think it gives you a different perspective on price formation and interchange flow in RT, which can be incredibly impactful at times. However, not having physical experience doesn't disqualify one from being an incredibly strong trader.
3. I think the "price shaving" effect of batteries is a bit over-hyped. At the end of the day, these are still incredibly capital intensive projects that demand strong return on investment, and this shows in how they're offering into the market. On the average day you might see decent battery penetration, but the last X% of the battery stack is still priced like a peaker and really doesn't change scarcity pricing that much compared with gas units.
4. Really depends on the type of trading. There are definitely funds out there with minimal congestion understanding that are still quite profitable in the term space, but if you're a basis trader then obviously congestion is going to be important. Overall, congestion is likely not going to make or break a term trading career.
5. 
6. In general I think power has seen a pretty large inflow of capital over the last 5-10y, and another massive inflow of participants during this AI boom. We've seen Google, Meta, and now OpenAI all hiring "Power Traders" to hedge their term exposure/variable exposure (during training vs during inference). 
7. On the DA/RT side (and even cash to some extent) , you can get away with paying a little bit less attention to regulatory changes. However with FTRs and Term regulation can have a massive impact, and I know of some traders who's focus is on the regulatory side and how that affects price formation. More recently with the surge of load build-out, regulatory changes are becoming more and more important.
    
8. Personally, all for them. Why we ever decommissioned NUCs is beyond me. 
   From a trader's POV, this has basically no impact. Base-load gen is always going to be at the bottom of the stack and will basically never set price, so worst case scenario is this shifts the curve to the left, we see less volatility for a bit until older coal/nat-gas units are retired and we see volatility a bit more. 
   From an economics perspective, I don't see these being cost-effective for at least another 5-10y. The first batch are going to be subsidized by VCs and are essentially proof-of-concepts. The next batch will hit the headwinds of NIMBYs and are still likely less cost-effective than just securing a firm contract.