Swiss Re helps windfarms cover calm days
Swiss Re Corporate Solutions has teamed up with Infigen Energy to create Australia’s first hedging tool to cover risk in windfarms.
The hedge, covering windfarms across SA, NSW and WA with more than 500 megawatts of capacity, pays Infigen a fixed amount per megawatt-hour for periods of low wind.
“Windfarm operators are constantly looking for ways to better protect themselves in low-wind weather cycles,” Swiss Re Corporate Solutions Head of Weather Solutions for Asia-Pacific Jamie Summons said.
The hedge is based on actual energy production across multiple sites, unlike traditional wind protection solutions that are tied to single-site modelled windspeed indices. It increases cashflow predictability and reduces earnings volatility.
Swiss Re says tailored hedging solutions can cover shortfalls and compensate for when the sun doesn’t shine or the wind doesn’t blow.
Industries such as agriculture, construction, tourism and retail are also affected by adverse weather.
A Swiss Re report – Profiling the Risks in Solar and Wind – says global demand for risk management services will increase as the renewable energy sector grows.
By the end of this decade, a 50% increase in renewable energy investment is likely to more than double spending on insurance and other risk transfer solutions in six of the world’s leading renewable energy markets.
Annual spending on risk management services may be between $US1.5 billion and $US2.8 billion ($1.93 billion and $3.61 billion) by 2020.