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The State of the Art in Renewable Energy Risk Mitigation: A Case Study

todayNovember 14, 2023 8

Background

Presenter: Brock Mosovsky (cQuant.io)

Description:

The ongoing transition toward renewable energy is leaving power producers, load serving entities, traders, and other electricity market participants more exposed to “intermittency risk” than ever before. Because of their non-dispatchability, wind and solar assets have significantly different financial and risk profiles than their thermal generator forbears. Add to that the tightening negative covariance between generation and price as renewable penetration continues to increase, and you have a recipe for accelerated losses precisely when generation is highest.

So how do you mitigate risk for an asset you can't control? In this talk, we present a case study focused on strategies for hedging solar assets in different regions of the continental United States. We explore optimal sizing of various types of financial hedges (e.g., block vs. shaped) and also optimize the sizing of a battery storage asset co-located with the solar facility, discussing the analytical approach and comparing/contrasting outcomes across strategies and regions. This talk will help participants:

  • Learn best practices for hedge and battery sizing relative to renewable generation facilities.
  • Understand the key drivers of value and risk for renewable energy assets and contracts.
  • Recognize the essential role of analytics in managing today's complex energy portfolios.

Written by: Commodities People

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