Japan NRG’s launch of its GxxD reports comes at a time when we as an executive search agency have noticed a clear closing of the gap between the Green and Digital talent markets.
The GxxD reports examine the twin focuses on GX (Green Transformation) and DX (Digital Transformation) that are championed by Japan in a bid to remain competitive, and gain a competitive advantage in a fast-paced and rapidly changing global marketplace.
On the ground level we’ve noticed a significant uptick in cross-team projects between our GreenTech division (renewable energy, green finance, power markets) and our Business Innovation division (digital transformation, artificial intelligence, business intelligence).
Increasing demand and supply in a digitizing economy
According to the GxxD reports, data center and related energy consumption is predicted to increase 500-fold by 2050. Data centers have an inherently heavy energy demand coming from processing and cooling systems, and their owners typically have strong ESG mandates, hence they are under heavy pressure for this energy to be derived from clean sources.
Data center operators are not the only business vying to procure clean electrons though, the nationwide demand for CPPAs is increasing rapidly. As supply struggles to keep up with demand, many developers are expanding their teams to develop renewable energy plants.
From a skills perspective, project development, engineering, project management and operations between renewable energy and data center assets are remarkably similar, hence there’s an increasing opportunity for professionals experienced in either asset type to move between green and digital projects.
This coming together of energy generation and digital infrastructure assets is also reflected at the investor level. Infrastructure funds who had previously focused on energy generation assets with strong returns from FIT days are diversifying, with battery energy storage systems (BESS) and data centers the main areas of interest from the fund perspective.
Clean energy is only the tip of the iceberg for the power hungry data center industry. Energy efficiency and energy security are key priorities as well. This drives an increase in demand for advanced energy management software systems, as well as an increase in backup power systems that are increasingly in the form of on-site BESS. The increase of such BTM (behind-the-meter) systems that will also be trading power via other revenue streams is one factor leading to increased talent demand in our next growth sector.
Trading gets smart
Over the past five years, Japan’s energy trading landscape has shifted dramatically to become the world’s third-largest liberalized market. With the recent eight-fold increase in futures trading on the TOCOM, and outsized growth on the rival EEX platform, as well as the fact that around 40% of physical power in Japan now trades on the JEPX spot/wholesale exchange, there’s an increasing interest in market mechanisms from both domestic and global players.
Add to that the growing complexity of mirroring real-world energy trends (more weather-reliant renewables and energy storage units in the grid, the appearance of EVs and demand-response schemes, etc.), and you can see how important analytics, algorithms, and other digital tools become to help traders make sense (and money!) in today’s markets.
AI-driven algorithmic trading is clearly on the rise, with global firms experienced in this from Europe, U.S. or Australia now building out their footprint in the Japanese market. Domestic players too are getting in on the act with their own systems.
On the talent side, this has led to energy players tapping into new talent pools. Quants from the finance or rapid trading areas such as FX, data scientists and machine learning experts from various industries are now in demand across the energy and power space as firms recognise the need to be more intelligent, faster and more automated in their trading strategies.
Opportunities for new blood
The merging of GX and DX businesses is a GxxD thing for the talent market! Fresh ideas in any industry are directly correlated with fresh talent moving in. There was stagnation before the renewable energy boom, and there was a second phase of stagnation as large-scale renewable energy development began to plateau.
The digital revolution in the energy sector drives the opportunity to attract new talent, new ideas and move innovation.
Case study 1: Data science in trading optimisation and aggregation
Titan was retained to build out the initial team for a Japanese player to develop the trading optimisers for their business that will aggregate and trade power using various routes to revenue. Due to the large data sets required to predict fluctuations, spreads and potential trading risks, we were tasked with supporting the hire of multiple data scientists.
Working with the client, we helped them to craft an attractive story, not only about their position and company but also about the power market itself as a meaningful and lucrative industry. As a result, the first recruit we successfully hired was a trilingual professional quantitative data scientist with experience in risk management in the insurance industry, as well as pricing strategies in FX, commodity and equity markets.
Case study 2: Large power consumer building out generation capabilities
Over the past six months, Titan has worked with a leading investor and developer of large, power hungry assets such as data centers and logistics facilities. As with many such companies, they were under increasing pressure to hit ESG targets, and faced challenges to procure sufficient clean energy from CPPAs. They decided to launch a new fund and team that would be dedicated to development of renewable energy and storage assets for their own consumption.
We worked with them to understand the renewable energy talent market, as well as design the interview process to allow them to accurately screen professionals from the renewables industry that they had previously not tapped into. To date, we have supported them to hire three investment and development professionals who have acquired secondary market assets and built a large pipeline of greenfield assets, as well as built out a network of local development partners.
Summary: GxxD developments in the talent market
As the energy business becomes more complex, demand increases, volatility remains in the market, the need for more data-driven decisions is sure to increase. What we are seeing in the market at the moment seems to be just the beginning, and the talent market shifts resulting from the convergence of the energy and digital markets will provide diverse opportunities for a wider range of professionals than we have seen to date.
Andrew Statter is a Partner at Titan GreenTech, an executive recruitment agency focused on the clean energy space.
K.K. Yuri Group, the operator of the Japan NRG services, launched its GxxD project in May 2024. Further information and the first set of reports are openly available on the company website: https://www.yuri-group.co.jp/gxxd
