Prospectus
What
Tree(3) is building the world's most quantitative commodities platform with the capability to price any energy contract, anywhere in the global commodities markets.
Our goal is to develop a well-calibrated price forecasts for every contract in market-traded energy commodities anywhere in the world; forecasts that both lead the market in accuracy and which quantify with data the fundamental sources of uncertainty that drive volatility in the value of energy.
We monetize our views by trading financial derivatives of energy with an emphasis on electricity and natural gas futures. In the next phase of growth, Tree(3) will make targeted, strategic investments in physical assets & infrastructure that anticipate the need for energy at key points in the global energy network. [edit with something more about identifying value]
How
We simulate 1) the fundamental physical processes that drive supply and demand for energy, 2) the market structures that are used to regulate their transaction, 3) and the behaviors and incentives of agents participating in the system. The result is a comprehensive, global [view sounds weak. more a simulator?] of supply, demand, and flows of energy, modeling the state of the world with unprecedented temporal & spatial granularity from the present moment out several years.
The core of the Tree(3)'s capabilities is comprised of leading analytical system for forecasting, data processing, computation, machine-learning, weather, and energy system modeling. These capabilities are not derived from market vendors but are developed entirely in house, offering a completely orthogonal source of skill compared to the rest of the market. From weather to energy systems to power flow, the team has impemented models with unprecedented sophistication with a fraction of the manpower of industry leading funds. Electricty and natural gas networks are modeled jointly with a theory of constraints driving price formation. Related feedstocks (oil, refined products, coal) and equipment supply chains (PV, batteries, turbines, electrical equipment) are considered in detail and connected to the model where appropriate.
We collect novel alternative sources of data and use creative triangulation between data sources combined with physics-informed data assimilation techniques. We ingest huge amounts of publicly available data and complement it with vendor data and self-collected data.
Focuses on a joint model of the energy system and probabilistic forecasts enables risk to be deployed with respect to correlated events and tail risks with optimal portfolios of assets across categories and locations. This is driven by investor behavior, market dynamics, and the physical coupling of physical and meteorological processes across time and space.
Why
The energy system is at a dynamic inflection point, driven by the explosion in AI power demand. The rate of increase of demand for energy, particularly electricity, is unprecedented. Traditional, stationary assumptions about energy no longer apply. Rules of thumb of understanding the world are full of blindspots. More than ever, the future of energy does not resemble the past. Without a physically driven view of the world, anticipating the developments in the global energy markets is impossible.
At the same time as markets are becoming more challenging to understand and anticipate, there is a rapidly increasing need for the market as new generation and load come online and are looking to hedge. These are the conditions for temporary S-D imbalances and there is tremendous value to be created by understanding where and why these imbalances are likely to occur, before they materialize. Tree(3)'s approach to the markets is ideally suited to this task.
Who
The Tree(3) team is comprised of researchers on the cutting edge of R&D in energy and machine learning and market experts with deep experience in trading, power system operation, and market design. They have both energy industry experience and tenures at the leading finance & tech firms. Intelligent automation allows Tree(3) to operate with significantly lower headcount than traditional energy trading organizations while maintaining an extremely rapid research and development cycle. A laser focus on accumulating, storing, and making sense of data about the markets and energy system results in a first-class data culture, giving Tree(3) a persistent edge despite the constantly changing reality.
The team is currently looking to bring on additional expertise in computing, statistics, and meteorology.
When
Tree(3) will launch in March 2027. We expect to enter the markets in summer 2027, starting with trading short-tenor electricity and associated natural gas futures in the major North American markets: PJM and ERCOT. These markets provide the most immediate opportunity for Tree(3) to leverage its strengths in modeling natural-gas network coupling and power network congestion.
The team is actively building out analytical capabilities in other asset classes (long-term tenors, FTRs, physical assets, LNG, oil) and geographies (other NA markets, European EEX, Australian NEM).