Energy Companies and Portfolio Managers Risk Exposure to Winter Volumetric and Price Risks

This past summer’s record-high temperatures in Southern Europe have demonstrated that without appropriate weather hedges in place, large energy consumers, energy companies and portfolio managers can be exposed to a dangerous level of weather risks.  As winter approaches, unusually mild or extremely cold temperatures are a further threat. Now is the time for these businesses to buy a hedge to protect themselves from temperature uncertainties or risk aggregated losses as the effects of climate change continue to bring unseasonal weather and unexpected and extreme weather events. 

This past summer we have seen large temperature variations across Europe, resulting in a number of challenges for energy markets. For instance, looking at three city centers across southern Europe, June and August 2017 were the hottest of the last ten years, while July’s temperatures were close to average. Temperature peaks drove power consumption during the summer with consumers’ intensive use of air conditioning units during heat waves.

Did the effects of these extreme temperatures impact your portfolio? Did you anticipate these energy peaks and put in place an appropriate weather hedge?

As an example of how a weather hedge can make a difference, Meteo Protect offered the following parametric insurance product in May to hedge against hot temperatures in June for Marseille. Following Marseille’s summer weather, it had a potential EUR 1,000,000 payout.

With winter season approaching, your portfolio may be exposed to either unusually mild or extremely cold temperatures. Now is the time to buy a hedge to protect your business from temperature uncertainties. The only limit is that all purchases must be made a minimum of 15 days prior to the specified weather risk.

As a European leader in weather risk management, Meteo Protect offers hedging solutions to a number of well-known energy companies. Thanks to its in-house pricing and structuring platform, they  are now able to provide large energy consumers, energy companies and portfolio managers with easy and fast access for weather-hedging solutions based on individual parameters. Meteo Protect will assess your weather risks, structure the necessary weather risk hedging products, and transfer your risk to specialized counterparties.

Meteo Protect will be attending European Utility Week in Amsterdam on 3-5 October. During the programme, Meteo Protect’s energy sales team will be available at the SAP booth to provide demos of web-based underwriting and pricing platform to produce completely customized insurance for any weather-related risk for the utilities sector.