At Interkraft, Mr. Aas moved from risk management to trading and was soon earning tens of millions of dollars in bonuses. After stints at other firms, he decided to strike out on his own.
He set up shop in his hometown, Grimstad, in a hilltop villa overlooking a bay. In recent years, residents said, he bought all the neighboring plots and houses to ensure his family’s privacy. By 2016, Mr. Aas had become the largest taxpayer in Norway, where tax returns are public information. He reported income of 833 million Norwegian kroner that year, or $97 million.
Grimstad, with a population of about 20,000, collected a tax windfall, using the money to improve schools and the library, and to cut the cost of public kindergarten, said Monica Helland, Grimstad’s highest-ranking civil servant.
Mr. Aas became so wealthy that in 2007, Nasdaq Clearing allowed him to become a member, a privilege normally reserved for banks and investment funds. That status permitted him to clear his trades without going through a bank, and was highly unusual.
By late summer 2018, Mr. Aas had made huge bets on the difference in price, or the spread, between futures on the Nordic power market and futures on the German power market. Mr. Aas was “a big whale in the market,” said Peter C. Warren, a British derivatives expert and financial commentator based in Norway. “It was him on one side with this huge position, and the rest of the market on the other side.”
Usually, the spread between German and Nordic futures remained within a narrow band. But in August, a confluence of events pushed the gap far wider than Mr. Aas had wagered.
The cost of carbon emissions permits, which power companies must buy in order to burn coal, spiked after European governments reduced the supply. That pushed up the price of German power. In Scandinavia, an unusually dry summer suddenly turned rainy, and the cost of hydropower plunged. The price of Nordic energy futures fell as the price of German futures rose.