Emerging risk of lack of wind
Amidst the race to meet net-zero targets, the global wind energy market is expected to grow from $114 billion to $127 in 2024. Whether off-shore or on land however, the influential and global growth of the wind power industry comes with inevitable financial risks due to the resource’s inherent volatility. Renewable wind energy operators and investors have seen an unprecedented drop in energy production in the most recent years due to so-called ‘wind droughts’ such as India 2020 and Europe 2021.
This introduces an immense strain on wind farm operators’ revenue flow as enduring a poor wind season causes significant drops in revenue. Moreover, the traditional market does not cover revenue loss driven by wind power volatility, leaving clients, their balance sheet and their net margin unprotected. Without a solution in the traditional space to insure against the unpredictability of renewable revenues, stakeholders ranging from operators and financiers are left absorbing the gap when wind yield impacts revenue flow.
Descartes’ parametric solutions offer a financial hedge against wind yield volatility. Customized precisely to the client’s wind farm locations, turbine technology, and historical yield, we protect against loss of income due to lack of wind through a straightforward, index-based solution that triggers based on objective, third-party data.
Assess
We assess and evaluate the client's risk of prolonged low wind speeds, leveraging wind speed datasets.
Customize
Design a customized cover, fit to the client's unique needs, in which payout structures are indexed according to the energy production from wind speeds and client's turbine power curves.
Monitor
Upon policy inception, we monitor and review the insured's location the hourly wind speeds to determine whether a qualifying lack of wind has occurred.
Payout
Insured client receives a payout within days of the concluded coverage period, stabilizing their balance sheet and boosting their net margin.
Our case studies are all over the world
Utilizing Machine Learning and real-time monitoring from satellite imagery & IoT, our state-of-the-art technology helps businesses bounce back faster against climate, cyber and other emerging risks.
Our parametric approach to wind volatility
Our parametric wind yield product is structured using a combination of hourly satellite data and individual wind turbines’ power curves.
We develop an index calibrated to historical wind data and the turbine’s power curve to model hourly energy production and calculate the yearly power output. Working hand-in-hand with the client and broker, we define the index triggers and corresponding payout amounts to flexibly meet their risk appetite.
The result is a simple, transparent policy that provides swift payment when the aggregate hourly recorded wind speed falls below a certain pre-agreed percentage of the modeled average during the annual policy period.
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