Interview: Nodal Exchange’s Paul Cusenza

Paul Cusenza, chief executive of Nodal Exchange, discusses the current fundamentals driving electricity prices, the growing confidence in state-driven environmental programmes and why Nodal has a 95% share of the US zonal power markets

Cusenza says it is “a fascinating time” to be in US power markets as they transition towards much greater use of renewables while facing surging demand from data centres and industrial growth. On top of that, extreme weather events and geopolitical upheavals are creating volatility.

From its launch in 2009, Nodal was designed to address the granular nature of the US power market by allowing traders to hedge the zones and nodes with as little basis risk as possible. To do this, the exchange took an innovative approach to risk management using portfolio margining and expected shortfall to address the idiosyncrasies of electricity price curves, he says.

Nodal Exchange has extended this granular approach to the environmental markets where it now lists over 120 contracts, more than any other exchange.

Key discussion points:

0.50 – What are the key issues US power traders are keeping an eye on right now?

2.42 – Power prices in the California region, where there is a lot of solar, went negative for all of April 2024. With the spread of renewables across the US, is this a blueprint for other regions?

6.00 – Nodal now has 57% of the open interest in US power market futures. To what do you attribute this?

7.43 – Nodal lists some 120 different environmental products. What is Nodal data telling us about expectations in these markets right now?