Independent renewable energy generators can help offset falling revenues by being smarter about when they sell power, according to a new report from SmartestEnergy.
The report – ‘Power Shift: Mitigating risk and becoming more active in a changing energy market’ – says that companies can reduce risk and boost revenues, if they instigate hedging strategies tracking energy prices four seasons ahead.
SmartestEnergy vice president renewables Iain Robertson said: “Independents know that they can benefit from a more active hedging strategy but most lack the experience and resources to do this.
“We have responded by developing an industry-first product designed to help generators make the most of their assets and support continuing growth in the sector.”
The company has launched a power purchase agreement, which it said “enables generators to take advantage of a rising market and protects them when prices fall”.
SmartestEnergy said its traders monitor the market on behalf of each generator, working to agreed guidelines on a four-season hedging strategy.
When prices rise 10% above an agreed reference price it will trigger a sale, but a fall of only 5% is needed to trigger a sale, it said
“In the nearest two seasons each time a trigger is hit 50% of remaining capacity is sold. However, in the two later seasons only 25% is sold at each trigger point in order to maximise the opportunity to benefit from future price growth,” SmartestEnergy said.
Image: Free Images/Christian Wagner
