Dunkelflaute - a good lesson to learn
??? Hedging wind production with standard products like baseload can expose you to significant volume risk.
Current week starting 4 November 2024 is a good example of a Dunkelflaute in Germany and demonstrates how much a producer could lose when hedging unknown production with baseload futures.
Imagine a wind asset was forecasted to produce an average of 10 MW during Q4, and the producer sold that volume forward at 80€. Ignoring shape for simplicity, with this week’s energy prices spiking to 125€ (Friday close), the seller would need to buy back power at a considerable loss. And the producer would incur a hedging loss for this week of :
10 MW 24 hours 7 days * (125€ - 80€) = ~75,600
Once the realised prices are complete the loss may turn even higher, today is only Wednesday.
It once again underscores the critical importance of tailored hedging strategies for renewable assets to mitigate volume and price risks, especially during low-wind periods like a Dunkelflaute.
As we move toward more renewable-based energy systems, what other innovative hedging strategies are you seeing to manage risks?
CEO, Fr?lunda Tech Holding AB
2 个月Academic topic for discussion: PUMPED STORAGE RESERVOIRS (NORWAY): - Skjerstad fjord (25 TWh) - Mj?sa (17,6 TWh) - Sandsfjorden (8,1 TWh) - Tingvollfjorden (4,1 TWh) - Lysefjorden (3,6 TWh) - Beitstadsfjorden (3,2 TWh) - Tinnsj? (2,8 TWh) - Hornindalsvatnet (2,6 TWh) - F?rdefjorden (2,4 TWh) - Troms? (2,5 TWh) - Tyrifjorden (1,9 TWh) - Salsvatnet (1,6 TWh) - Fyresvatn (1,5 TWh) - Suldalsvatnet (1,5 TWh) - Lundevatnet (1 TWh) - Less-Than-1-TWh-Reservoirs (3,8 TWh) Grand Total: 83,2 TWh . Downloadable (more detailed) table: https://lnkd.in/dEhEdniu . BACKGROUND: - Large quantities of electric energy can be stored in norwegian fjords (since they are very deep): - Wikipedia(Pumped Storage): https://lnkd.in/gTHZrjj . (FJORDS) Time-dependent wind/sun --> --> Water pumping (fjord --> sea) --> Height diff (fjord<-->sea) --> Hydropower (sea --> fjord) (Or)Hydropower (upstream non-saline water --> fjord) --> "On-demand wind/solar electricity" . (LAKES) Time-dependent wind/sun --> --> Water pumping (lake --> downstream river) --> Height diff (upstream river <--> lake) --> Hydropower (upstream river --> lake) --> "On-demand wind/solar electricity" . Nuclear power (off-peak hours)--> (Same as above) "Nuclear power" (peak hours)(indirec)