Where do traders in the energy industry go to find global power market forecasts for electrical, wind and solar?
Kentucky.
Where do shipping magnates go to find real-time maps, showing how many supertankers are currently carrying crude oil on the world’s oceans?
Kentucky.
Where do bidders for crude go to find out background on the oil supply chain, like transportation delays, refinery outages and oversupply?
Kentucky, again.
Why? Because Kentucky is the home of Genscape, a nimble and innovative company that boasts the world’s largest monitoring network for the entire energy spectrum, from electrical power to oil, natural gas, petrochemicals and NGL, agriculture, biofuels and maritime crude freighters.
When Genscape puts together the results of all that monitoring, it can provide thousands of subscribers high-quality, real-time access to that data. That means traders can make better trades, the markets can set better pricing for commodities based on real-time data, and utility companies can make perfectly pitched investments in their businesses based on real-world business models. Genscape brings a transparency to the global energy market where none existed before.
Company founders created a business and a demand for this data, essentially building their own market. And they did it all here, with their headquarters in the Old Louisville section of Louisville, Ky., employing around 100, with an additional 350 employees in offices across the globe, including Boston, Houston, Amsterdam, San Francisco, New Jersey, Hamburg, Calgary, London, Singapore and many others.
Co-founders Sean O’Leary and Sterling Lapinski received an Ernst & Young Entrepreneur of the Year award in 2003 for their early success, even before Genscape’s expansion into other countries and other energy markets.
O’Leary has a University of Michigan bachelor’s in finance and economics and a University of Louisville MBA in entrepreneurship. Lapinski has a bachelor’s in finance from the Wharton School of Business at the University of Pennsylvania, and has extensive experience in energy trading. As Genscape’s chief development officer, Sterling created and managed the technology and intellectual property core of the business.
“There are three things that dictate price in the energy markets: supply, basically how much you have; demand, or now much is needed; and transport, which is how it’s delivered,” said Dierdre Alphenaar, chief research and development officer at Genscape headquarters in Louisville. “Our founders back in 1999 were in the business of trading electric power. And as volatile as that market was, they realized that they were basically making educated guesses and operating in the blind.
“Prices moved up and down, and they had no visibility as to why. They asked themselves, what would it take to get the hard information we needed to buy and sell?” Alphenaar said. “They realized they had to have visibility across all supply, demand and transport for that to happen. And Genscape was born out of that.”
Creating better power industry data
Genscape started by developing the tech to monitor the flow of electricity throughout the grid, according to Alphenaar. This presented certain problems, as it would be difficult to get permissions from every power plant to install monitoring devices. Instead, the team patented a remote monitoring device that could be set outside the plants, nearby to the central power lines that exited
the plants. These small, inexpensive devices served as remote sensing meters, measuring the magnetic field coming off those lines.
“Those sensors beam back information every five minutes,” she said, “and we can apply math to take the magnetic field value and translate that to the megawatt power flow. We combine that with our satellites, which allow us to read thermal imagery on the power plants, showing us if they are running, or closed, or broken down. Put that all together, and we have a true visibility to the market. If the market needs to make pricing decisions based on the supply of power, they have all the information they need to make those calls, in real time.”
Over the years, Genscape has deployed this technology to monitor 1,000 power plants across the globe. Its clients pay for that information as part of a subscription service. The present client base includes the majority of the top global commodity and energy trading hedge funds, banks, producers and marketers, as well as numerous government entities, including the U.S. Department of Energy and the Federal Energy Regulatory Commission.
And it’s not just the big players who are signing on. The company says it has picked up numerous small and medium-sized clients that find having the right information pays them dividends that justify their investment.
Tracking oil, gas and shipping
Genscape’s market intelligence began but doesn’t end with the monitoring of electricity. It’s applied much of its expertise to tracking the oil and gas industry as well. In many respects it’s a much harder job, as the company has to track not just the refineries themselves but the pipelines that carry the product.
But in this case, Alphenaar said, the original proprietary tech helps because the remote power-flow-sensing monitors track energy current to the motors that pump gas through pipelines.
“We can take that data and extrapolate it, so we can calculate how fast crude is being pumped through the pipelines,” she said.
Genscape monitors more than 130 key U.S. and European oil refining and processing facilities. Its subscribers can get reports on the status of the ethanol supply chain and global biodiesel imports as well.
But it doesn’t stop there. After all, they may be able to tell how much crude is being produced, but that information means little if the crude doesn’t get to its destination. To address that question, Genscape also tracks the movement of crude oil over the open seas.
All ships above a certain size engaged in sea transport are required to have a collision control beacon that transmits information such as the ship’s manifest data, the country where it is chartered, its destination and the like, Alphenaar said. Genscape’s technology follows roughly 144,000 commercial ships daily, aggregating the beacon data all ships use. Additionally, Genscape’s Vesseltracker technology monitors activity in ports.
“Who’s coming in? Who’s waiting to offload? Where have there been shipping accidents? Whose shipments are delayed due to weather? All these things are very, very important to know, not just to oil and gas, but to traders, shipping companies, insurers and a broad spectrum of industries,” Alphenaar said.
Clients using the system are able to access an interactive global map that shows the exact location of all the ships on the seas, and allows them to run reports based on type of cargo, point of origin, destination and more.
Genscape has continued to keep clients coming back by continuing to dive deeper into all the data and all the factors surrounding an industry. For instance, the company recently developed a product they call Digital H2O, which collects data regarding the use and flow of wastewater in the oil and gas industry.
“That may seem like a small detail, when you first look at it,” Alphenaar said, “but you have to have water if you want to drill a well for oil or gas. And you have to have a way to dispose of that water after it has played its part in the drilling process. If you’re going to run a drilling project, you have to answer the question: What is the load on the local wastewater disposal wells? Can I open a well in another county and have access to the water I need? Who else is using the wastewater system in this area? If I use water, where will I have to dispose of my wastewater?”
Through Genscape’s system, clients are able to aggregate the public domain water management documents to get a total picture of what everyone around them is doing with their water – how it’s sourced, where it’s disposed, and how much is being used. They add in big data to aggregate the information, slice it into manageable reports, and add in analytics.
Tracking the growing solar industry
Think it’s impossible to monitor the flow of electricity being generated by all the solar panels in solar farms and on rooftops? Not surprisingly, Genscape has found a way to monitor this new flow of energy, too. In fact, by its estimates, the global production of solar grew by 53 percent in 2016 alone.
Genscape acquired Locus Energy, a solar monitoring company, to help it quickly get its arms around the global trade in solar power. Using remote sensing technology similar to that for traditional power plants, Locus has deployed more than 150,000 sensors worldwide, resulting in more than 80 billion data points collected, with most of that coming from the U.S.
The information can come from sensors embedded in the panels themselves, or through sensors monitoring the output on the lines. Even with but 13.5 percent of U.S. solar capacity covered through Locus, the information generated is invaluable to larger utilities, capital providers, equipment manufacturers and asset managers.
Born in Louisville, staying in Louisville
Though Genscape’s business is focused on tracking the energy industry, it theoretically can follow any supply chain for any industry. The company has already branched into following soybean processing, and U.S. fertilizer production and transportation.
And in the future? Expect to see Genscape offer tracking on supplies of lithium ion or any other feed stock going into the supply of batteries and solar panels.
Whatever the company does, it can be counted on to keep its commitment to staying headquartered in Louisville. In fact, the company recently relocated to 1140 Garvin Place, the former site of a dairy operation in Old Louisville. The company signed a 10-year lease after Garvin Place Properties LLC invested $3 million in renovating the property. The location is large enough to allow the company to increase its workforce significantly.
“Genscape has made a commitment to preserving Louisville’s infrastructure by moving into Old Louisville. They have truly made it a modern-day office environment,” said Deana Epperly-Karem, vice president of economic development at Greater Louisville Inc. “Their leadership knows how to engage employees, and their office space reflects that, with a creative modern space offering employees opportunities to work together, relax, play and be their most productive. They are a leader in recruiting the best and the brightest to our region. We’re proud to have them here,” she said.
As a native of Ireland and Cambridge, England, Alphenaar can personally attest to the city’s ability to attract the right candidates.
“So many of the people we employ are Ph.Ds, and highly educated people. We hold open houses here for business owners who are considering a move to Kentucky pretty often. And they always ask us, do you have the talent pool you need here? And we say ‘yes’ every time, because we got our start here, and we’ve grown here,” she said. “The people we’ve attracted here are happy, and like to stay. We’re looking forward to what the future will hold for us here.”
Susan Gosselin is a correspondent for The Lane Report. She can be reached at [email protected].
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