As the industry transitions to auctions and feed-in-premiums for allocating renewable energy support, wind power projects are getting more exposed to market risks.
With the growth of the wind power sector and the increased market exposure there will be a need for credit enhancement solutions and structured products that transfer the risks from the project company to a counterparty willing to accept these risks.
This report studies the potential impact of hedging the variability of wind energy generation.
New wind capacity will no longer benefit from Feed-in Tariff. By 2030 only 6% of the EU capacity could be fully protected against market risk.
At least 190 TWh – equivalent to the electricity demand of Poland – will be able to benefit from hedging.
Wind farms need to cope with variability in weather patterns which affect their revenues. See the variation on a 30 MW wind farm receiving a tariff of €42.8/MWh.
For an onshore wind farm of 102 MW that benefits from a wind hedge for underproduction, total benefits on the Net Present Value (NPV) could accumulate to €4.5m.