Naeem Hukkawala, 42, and Kapil Mohindra, 39, are veterans of many Wall Street markets and with their new venture, Stamford-based Skystream Markets, they are taking on renewable energy.
The renewable energy market, according to Hukkawala and Mohindra, was growing, yet it lacked the technical oomph they and their team of 16 Skystream employees have been providing since their 2011 initial trading platform rollout.
Other markets in the future may receive similar IT-market know-how if they suffer from what the Skystream founders uncovered in the nascent renewable energy arena: an industry with a tech trading deficiency.
“We look at markets that are growing rapidly and if there”™s not an electronic trading technology, we look to build and deliver that,” said Mohindra in a conference call with the Business Journal. “Renewable energy is our first ”” there was really a lack of trading tools there that are found in other industries.”
Hukkawala, who has an MBA from New York University with a background in commodities, trading and investing, was also a specialist in credit markets, which he called “good experience in how to build exchange markets.” Mohindra”™s background (Boston University, Solomon Bros.) prompted Hukkawala to note, “We share a lot of the same type of experience and background. Between the two of us we”™ve seen every major marketplace.” They refer to each other as “a second set of eyes, a second set of opinions. Together, we”™re very good at communicating the end product in a much stronger way.”
The company”™s first trading platform in 2011 they term an “auction type,” featuring multiple sellers for a single buyer or multiple buyers for a single seller. In 2012, Skystream made something of a quantum leap to a so-called “dynamic type” market trading platform, allowing and managing many bidders and many sellers simultaneously.
The company”™s trading platform for renewable energy credits, called RECStream, is now used by, among others, 75 utilities.
Markets are fueled by concerns that span commodities, regulatory changes and new products, said Mohindra, “They move very quickly.”
On the heels of a teleconference interview, they answered several questions:
In June you debuted your “multi-vintage” functionality that has allowed traders “to express a price view on the forward curve and transact ”˜outrights and strips”™ on an anonymous basis.” What does this mean for energy traders and, eventually, for energy users?
“We”™ve developed technology that delivers superior pricing information, which in turn makes these markets more efficient,” Hukkawala said. “This is an important point because efficient markets reduce the cost of capital for renewable energy development and encourage the uptake of renewable energy. As these markets grow, which we think they will, consumers can expect to see more of the energy that they use coming from renewable sources.”
You claim a track record in launching and growing successful trading platforms that companies use across numerous market segments. Can you give an example of such a market segment and how your products help?
“Skystream Markets has customized trading technology for various segments of the marketplace,” Mohindra said. “Our technology solves core problems that clients face when trading. Several of our platforms exemplify this approach. Skystream created a competitive auction platform to help producers of solar energy monetize their SRECs (solar renewable energy certificates) for as many years into the future are possible. These transactions lock in the economics of the project to provide a return to investors and clarify the cash flow of the project. This is key for getting solar projects off the ground. We”™ve helped a number of utility-scale solar development companies get their projects going. On a separate side of the market, Skystream has built its core trading platform, RECstream, which enables the largest renewable traders and utilities to value RECs across the state programs and renewable technologies including solar, wind, geothermal and biomass. RECstream is used daily by more than 75 utilities, energy commodity funds and scale renewable producers.”
You say you are expanding into new areas such as research, data and hedging products. Have you found that in answering the trading platform need you have created other avenues for growth? Any future plans in the energy arena? Other market plans for 2014?
“As in any growth market, the demand for information and trading technology increases over time,” Hukkawala said. “Skystream”™s customers are interested in products and services that complement and expand trading. This includes fundamental research and innovative new trade ideas.”
“As a pioneer in the REC (renewable energy certificate) market, Skystream invests in new products in response to growing interest from core producers and traders of renewable energy,” Mohindra said. “In addition to RECs, Skystream is constantly evaluating developments and innovation in the energy arena. Expansion into other growing environmental commodities markets is a logical next step for the business.”
The company, which participated in the state”™s quasi-public finance entity Connecticut Innovations, employs 16. Besides its corporate headquarters in Stamford, it operates a sales and brokerage in New York City and a smaller office in Boston focused exclusively on sales. “We”™re incredibly proud of our team,” Mohindra said. “It”™s not just about Naeem and me. For their hard work and implementation, they are leaders in the market of building these platforms.”
Why did you base your business in Stamford?
“We moved to Stamford in 2012 when Connecticut Innovations invested in our technology,” Hukkawala said. “Stamford is a hub for the financial services industry and Connecticut has a track record of ongoing, successful efforts to promote clean energy locally. There is a strong talent pool in Stamford that is well suited for our business. In addition, a lot of our business comes from renewable energy producers and utilities in New England states so it is strategically important to us to be located in Connecticut.”
What”™s the outlook for 2014?
“We”™re very excited about 2014,” Mohindra said. “We”™re continuing to grow our team and trading platform to keep pace with our market”™s growth. We”™re expanding into new areas such as research, data and hedging products. 2014 will be an important year as we are scaling up our business to reach renewable energy producers and commodities traders across North America.”
