Smarter investing in energy commodities

Banks, hedge funds, and private equity firms are among the new breed of participant in markets for trading energy commodities.
To continue to profit from these activities, such financial players must reexamine their original entry strategies and consider future growth opportunities in relatively unfamiliar product categories and geographies.
Several promising areas—power trading, asset arbitrage, and debt arbitrage—stand out.
Successful participants will need to broaden their skills, improve their lending capabilities, and increase their knowledge of the "physicals."

Exhibit 1: Financial institutions need to understand the energy commodities marketplace across three dimensions.
Exhibit 2: Power-generation investment opportunities will be very different across geographies.
Exhibit 3: The cross-asset arbitrage in the power sector is currently the least explored opportunity.
Exhibit 4: Investors can profit from commodities-debt arbitrage.