Genscape Offers Technology For Wide Access to Data On Each Plant's Output

By NINA SOVICH
DOW JONES NEWSWIRES
December 21, 2004

LONDON -- As power markets across Europe become increasingly liberalized, Genscape is hoping to revolutionize the region's power trading.

The small, closely held technology company has developed a method of measuring the amount of electricity emanating from individual power plants, and it sells that information to power traders. Now Genscape is targeting Europe, where more than €100 billion ($132.9 billion) a year in physically settled electricity is traded.

Wider access to power-output information could lend transparency to power trading across Europe, which would bolster liquidity and stabilize price swings. It also removes exclusive access to money-making information from incumbent utilities and spreads it around the market, making it easier for newcomers to compete.

Deregulation of continental European power and natural-gas markets has been slow since the idea was first floated in the late 1990s. But now Germany is poised to introduce a regulator, while France recently passed legislation that will encourage new electricity companies to compete with state-owned incumbent Electricite de France.

The U.K., the only European country that is fully deregulated, requires power plants to post output on a public Web site to add transparency to the market and prevent severe price fluctuations. Companies in the U.K. have to install complex software and monitoring devices to track their plant-output levels.

If the rest of Europe follows the U.K., Genscape's service could become an easy way to meet transparency regulations.

Genscape -- founded five years ago by energy traders frustrated by the opacity of the U.S. electricity market -- already monitors up to two-thirds of plants in France, the Netherlands and Germany, though it has only a handful of European clients.

"At the moment we're really focusing on Germany, France and the Netherlands," said the Louisville, Ky., company's chief executive officer, Sean O'Leary, who cut his teeth trading power at Southern Co., Atlanta. "Then we might look to Spain. We have to see in which direction the European market deregulates."

In the U.S., Genscape pays people who live near a power plant, such as farmers, to place an electromagnetic monitor under the transmission wires carrying electricity from the plant. The device measures electricity flows, giving an accurate reading of a plant's output, and the information then is sold to power traders.

Among European utilities, the electricity output of nuclear power plants -- by far the biggest producers -- is a secret on par with their security specifications. If a nuclear plant unexpectedly "trips," or goes off-line, it often removes so much electricity from the grid that the price of power can rise by as much as 10% in minutes.

A 662-megawatt unit of British Energy PLC's Heysham 2 nuclear plant tripped on Nov. 26 in the midst of heavy morning electricity trading, and within an hour the price had risen from £27.75 (€40.49 or $53.80) a megawatt-hour to £29.25/MWh, where it stayed for the rest of the day. Only a relatively small amount of power was taken off the U.K. grid, where daily demand is usually about 50,000 MW. But if a 2,000-MW plant trips, it can ruin an entire trading book if a trader has taken the wrong position. If a plant is about to trip, the utility company can inform its own power traders, who then rush to buy spot power. When news of the outage gets out, those traders have locked in cheap power -- and can watch as the price soars.

Genscape's network has begun pulling apart this system in the U.S., where it monitors a third of power plants. It serves 90 utility companies and banks that trade power, which can pay in excess of $200,000 (€150,500) a year for coast-to-coast information.

Genscape's biggest hurdle in Europe is selling the concept to traders skeptical of its technology.

Joe Toussaint, head of power trading at Citigroup Inc., said he raised questions about it, but found the service accurate. "When I was at [energy trading company] Cinergy Corp. we were big fans," he said. "We could see how plants were working across the entire Midwest, and once that information is out there, you pretty much need it."

While the devices need to be placed no less than 50 meters from the transmission lines, they don't require permission from the plant's owners or any sort of hookup to the wires. But Genscape could face another practical problem in Europe. In the U.S., most transmission wires are above ground, making it easy to figure out where to plant the monitor. However, in Europe, most transmission lines are buried.

Genscape wouldn't work in the Netherlands for this reason, said a spokesman at Dutch utility Nuon NV.

Mr. O'Leary, Genscape's CEO, says the technology works with underground lines. "To be honest, if we have no idea where the transmission line is, there can be a problem," he said. "But we can usually find the line."

Some U.K. traders expressed concern that utilities will bring a legal challenge against publishing the data. But lawyers dismissed that idea. "I can't imagine in any democratic country they would prohibit the exchange of this information," said Jonathan Evans, a London-based attorney at Norton Rose. Mr. Evans, a lawyer specializing in the utility industry, doesn't have any connection with Genscape.

In the U.S., the product's legality seems assured. A spokeswoman for the Department of Homeland Security confirmed it had been one of Genscape's clients since the department was created.

"They use it to monitor the grid from Washington," said Mr. O'Leary. "Because at the end of the day, there's really no other way for them to do it."

LOUISVILLE, KY (Oct. 19, 2004) – Genscape, Inc., the nation’s first and only supplier of real-time power generation information, has been named to Inc. Magazine’s 2004 Inc. 500, which honors the fastest-growing privately held companies in the U.S.

Genscape patented technology allows the company to determine power plant outputs and the health of the power grid in real time. Genscape collects this information from a network of almost 2,000 wireless monitoring devices across the United States and Europe. The company sells this critically important information about the power grid to a customer base that includes many of the world’s largest energy companies and various federal and state authorities. Genscape provides this information to its customers through its award-winning web-based interface, Genscape Power 2.3. Demand for Genscape’s unique service has led to a 20-fold increase in company revenues over the past four years. This performance was good enough to earn Genscape the 47th spot on the Inc. 500 list, and the highest ranking among all companies in the energy sector.

Genscape was founded in 1999 by former energy traders to serve the energy market’s need for better information. Genscape introduced its power monitoring technology in 2001, and the company’s network has developed rapidly since then to cover more than 400 power plants and power transmission pathways across the US and Europe. While continuing to grow the power monitoring network, the company’s recent expansion plans have included the development of monitoring technologies for additional energy markets such as natural gas and oil, and the creation of a publications division which provides important fundamental information for energy-related markets such as coal, emissions, and natural gas.

“We’ve been very fortunate to grow as we have”, said Sean O’Leary, Genscape’s co-founder and CEO. “The support we’ve received from the markets we’ve entered has been extraordinary and our staff has done a great job. We intend to use this recognition as a motivational tool to become a better company.”

Company co-founder and President Sterling Lapinski believe that the company has been able to crack the Inc. 500 by building a game-changing business model. “Market demand for Genscape’s service has been so great because the information we provide is radically superior to existing private and government services,” said Lapinski. “The Genscape model of creating market-driven information collection mechanisms has potential well beyond energy markets.”

The company’s technology has received numerous awards and the company’s co-founders were named Ernst & Young Entrepreneurs of the Year in 2003.

CORPORATE INFORMATION

Genscape Inc. was founded in 1999 and is privately held. GFI Energy Ventures, a leading private equity fund focused on the energy markets, and other investors acquired a majority interest in Genscape in August 2003. The company has 50 employees and is headquartered in Louisville, KY with European operations based out of Amsterdam, the Netherlands.

Inc. 500 AWARDS

The Inc. 500 ranks privately held companies according to averaged year-over-year sales growth over the past four years. With approximately 75% of all new job creation in the U.S. coming from small businesses, the Inc. 500 is a prescient indicator of the companies and industries that are driving the economy forward. Since 1982, the Inc. 500 has identified the next generation of world-class companies, with Microsoft, Stonyfield Farms, Timberland, Oracle, The Princeton Review, Morningstar, E* Trade, Intuit, and Domino’s Pizza all appearing on the list before they became industry powerhouses.

Amsterdam – 19 October 2004 - Genscape International, Inc. today announced the launch of Power Europe, a web based service providing customers accurate electricity generation and transmission flow data for facilities in the most important Continental European power trading markets. For the first time, wholesale electricity producers, traders and consumers will have access to detailed supply side information that serves to enhance market transparency and improve risk management. “Liquidity is the lifeblood of markets, and transparency is the most important factor in creating liquidity,” Sean O’Leary, chief executive officer of Genscape said. “We are pleased to be at the forefront of providing transparency to this vital market with data that is both unbiased and reliable.”

Genscape generates production and flow estimates based on information collected from a proprietary network of remote monitoring devices deployed at strategic locations in the European high voltage power grid. The service initially provides information for facilities located in the Netherlands, Germany and France. The Service is being formally launched at the EMART Energy Conference in Barcelona. Additional information and a live demonstration will be available at Genscape’s exhibit at the conference set for November 3rd and 4th.

About Genscape

Genscape Inc. is the world’s sole commercial provider of real-time power supply information to support decision-making for energy traders, power plant and line owners and operators, regulators, and other energy market participants. Genscape International Inc., a wholly owned subsidiary of Genscape Inc is licensed to deploy the Genscape technology in Europe.

Launched in 2001, Genscape Inc.’s Power North America service has become the industry standard for real-time electricity fundamental data.

Louisville, 4 August – Shortly after releasing the February and March coal use data by power plants, the EIA released its April figures, which again confirmed the accuracy of the estimates published weekly by Genscape.

For the entire fleet of 116 coal plants monitored by Genscape, the Genscape estimated figure was 1pc above the EIA figure for April. For January and February, the Genscape total was 4pc below the EIA figures, while March was 0.28pc above.

In the coal-heavy east north central region, which includes the Ohio Valley, Genscape’s April estimates exactly matched those of the EIA for the second month running. In the other regions, the maximum March discrepancy was 11 percent.

Genscape’s coal data is calculated using real-time observations from the 116 coal-fired plants and published weekly on Friday for the previous seven days in the Weekly Coal Burn Report. Genscape compares its calculated estimates with the EIA data collected from those same plants once that data is available.

The plants monitored by Genscape represent 49pc of total coal-fired capacity in the United States. The coal use estimates from that sample shows a correlation of more than 95pc with the total coal amount for all plants reported by the EIA.

Monthly discrepancy between Genscape and EIA data

Genscape launched the Weekly Coal Burn Report in May of this year. This is the second time that the EIA releases coal use data after the launch of the report.

ABOUT GENSCAPE

Genscape’s information gathering and distribution system consists of technology to monitor the real-time power output of power plants and load on high-voltage transmission lines. Information reported to customers includes highly accurate estimates of the real-time power output for generating facilities, power flows over strategic transmission paths, and associated information.

Genscape Inc. is the only company to have commercialized the provision of real-time power supply information to support decision-making for energy traders, power plant and line owners and operators, regulators, and other energy market participants. Genscape maintains a 45 person staff and an international headquarters in Louisville, Kentucky.

LOUISVILLE, KY, Wednesday7/28/04 - Genscape coal data showed a nearly perfect match with the Energy Information Administration figures for the first quarter 2004 released July 22.

For the entire fleet of 116 coal plants monitored by Genscape, the Genscape estimated figure was 0.28pc above the EIA figure. For January and February, the Genscape total was 4pc below the EIA figures.

In the coal-heavy east north central region, which includes the Ohio Valley, Genscape’s March estimates exactly matched those of the EIA. In the other regions, the maximum March discrepancy was 7 percent.

Genscape’s coal data is calculated using real-time observations from the 116 coal-fired plants and published weekly on Friday for the previous seven days in the Weekly Coal Burn Report. Genscape compares its calculated estimates with the EIA data collected from those same plants once that data is available.

The plants monitored by Genscape represent 49pc of total coal-fired capacity in the United States. The coal use estimates from that sample shows a correlation of more than 95pc with the total coal amount for all plants reported by the EIA.

Monthly discrepancy between Genscape and EIA data

Genscape launched the Weekly Coal Burn Report in May of this year. This is the second time that the EIA releases coal use data after the launch of the report.

ABOUT GENSCAPE

Genscape’s information gathering and distribution system consists of technology to monitor the real-time power output of power plants and load on high-voltage transmission lines. Information reported to customers includes highly accurate estimates of the real-time power output for generating facilities, power flows over strategic transmission paths, and associated information.
Genscape Inc. is the only company to have commercialized the provision of real-time power supply information to support decision-making for energy traders, power plant and line owners and operators, regulators, and other energy market participants. Genscape maintains a 45 person staff and an international headquarters in Louisville, Kentucky.

Genscape Releases Power Version 2.3 with Custom Alerts

LOUISVILLE, KY, Monday 4/5/04 - Genscape Inc., the nation’s first and only supplier of real-time power plant output and transmission status information has released Genscape Power version 2.3, which significantly increases the amount of data and features available to the company’s expanding customer base.

POWER VERSION 2.3

Power 2.3 enables subscribers to personalize their Genscape Power browsers and employ greater control over the plant alerts they receive while maintaining the ease-of-use and accuracy on which Genscape users have come to rely. Power 2.3 also marks the advent of Genscape’s Individual Transmission Line Data Report. This report offers a closer look at the current flows on critical transmission lines across the U.S., allowing users to more accurately predict when and where congestion may occur.

“Our customers have asked for more choices,” Said Sean O’Leary, Genscape CEO, “and that’s why we’re proud to offer Power 2.3. Genscape’s reputation is built on our ability and willingness to respond to customer requests.” The Individual Transmission Line Data Report, according to O’Leary, offers “a tremendous added value to Genscape’s service, since transmission congestion on individual lines is critical information to both the wholesale markets, and the regulatory arena.” Genscape currently monitors over 1,200 individual transmission lines across North America.

CUSTOM ALERT MANAGER

Along with the release of Power 2.3, Genscape has simultaneously released its Custom Alert Manager. This add-on module puts Genscape’s proprietary alert logic in the customers’ hands, allowing Genscape subscribers to set plant and transmission interconnection alerts based on scenarios and thresholds of their own design. Customers can adjust alert sensitivity and boundaries on over 275 power plants and strategic transmission points, with a range of options offered for specific points or groups of facilities.

“Different customers have different sensitivities to market events,” said Mike McAuliffe, Genscape Vice President of Sales. “The Custom Alert Manager Tool will allow them to set up their own alerting logic as well as view the existing Genscape Alerts we publish on a daily basis.”

LOUISVILLE, KY, Monday 5/10/04 - Genscape Inc., the nation’s first and only supplier of real-time power plant output and transmission status information today introduced the Weekly Coal Burn Report and Index, an accurate measure of the amount of coal burnt to generate electricity in the United States.

Genscape monitors electricity output at hundreds of plants and transmission points across the United States, including 115 coal-fired plants. The observed power output in MWh at those plants is translated into tons of coal burnt by using the most recent data from plant filings to the Energy Information Administration (EIA).

The sum of capacity at the coal-fired plants monitored by Genscape represents 49pc of the overall coal plant capacity nationwide. The coal consumption at those plants shows a perfect correlation with total coal consumption for power generation as reported by the EIA, according to Genscape calculations.

“Coal market participants have long wished for a measure of transparency similar to what the API provides for the oil sector,” Sean O’Leary, chief executive officer said. “Now, with this index, producers, consumers, and traders will have an accurate estimate, based on real observations, of how much coal was consumed during the previous week.”

The Genscape Weekly Coal Burn Index, will be published by the trade press and on the Genscape website. The Genscape Weekly Coal Burn Repot will include, the underlying plant-by-plant and regional breakdown and will be distributed to subscribing clients.

For the month of May, Genscape is offering complimentary trials of this report to participants in the coal market and the energy market in general.

ABOUT GENSCAPE
Genscape’s information gathering and distribution system consists of technology to monitor the real-time power output of power plants and load on high-voltage transmission lines. Information reported to customers includes highly accurate estimates of the real-time power output for generating facilities, power flows over strategic transmission paths, and associated information.

Genscape Inc. is the only company to have commercialized the provision of real-time power supply information to support decision-making for energy traders, power plant and line owners and operators, regulators, and other energy market participants. Genscape maintains a 45 person staff and an international headquarters in Louisville, Kentucky.