Renewables owners must protect revenue amid earthquake in Europe’s energy markets

The past few weeks have felt as if the earthquake has hit European energy markets. Deep shock waves spread from central government offices, sending markets across the continent into chaos. As a former energy trader, I must admit that I felt a bit queasy trying to understand how the various proposals would dampen the current volatility.

Regulatory uncertainty is unlike anything we’ve felt before. Discussions are underway in Germany about windfall taxes on energy companies, and Italy recently introduced a 25% windfall tax on energy companies, including renewable energy producers. In the UK, the government is currently consulting on the biggest reforms to the electricity market since its inception. Not to mention the current energy policies underway in Belgium, France, Hungary and Spain.

While all market and price signals pointed to a strong opportunity to reinvest profits, the rules of the game for renewable energy trading are changing, putting pressure on independent power producers (IPPs) and funds to monitor and hedge their revenue and build the trading capabilities needed to quickly adapt to market and regulatory changes.

Market challenges are profound

Owners of renewable energy portfolios have enjoyed abundant income and good profitability in recent years. This has been driven by Europe’s commitment to accelerate its energy transition and recent political momentum for stronger energy security at the bloc level. Gains across the sector can be seen in asset values, which have been up since late 2021.

However, the current situation requires new levels of energy trading sophistication from investors. On the other hand, utilities that buy renewable energy face liquidity pressures as they struggle to provide liquidity for collateral requirements. Rising electricity prices and increased volatility have sent many futures positions deep in the red, prompting exchanges to request hundreds of millions of pounds or euros overnight to cover margin calls.

On the other hand, IPPs and funds, which do not have extensive trading capabilities and facility expertise, are struggling to find strategies to effectively deal with uncertainty.

The article continues below the ad

While short-term power purchase agreements are used with increasing frequency to hedge renewable energy revenues, changing regulatory objectives is creating uncertainty about this strategy. It has therefore become extremely important for IPPs and funds to effectively monitor revenue and understand the potential challenges and opportunities arising from eventual regulatory changes so that they can effectively close these deals.

Renewables portfolio owners must protect revenue

To protect profits and revenue amid current market conditions, owners of renewable energy portfolios must increase their understanding of their revenue at risk and the equivalent exposure to underlying load. This is due to the use of actual and forecast production data, as well as reliable historical and future capture prices that help in calculating risk.

Owners of renewable energy portfolios cannot afford to delay their “coming of age”.

Furthermore, a short-term power purchase agreement is an essential tool that can be improved to improve hedging and risk management. Portfolio management software and advanced trading services can fill the gap in capabilities needed to structure and manage short-term PPAs, helping IPPs and funds to execute short-term trades and leveling the playing field with facilities and professional traders.

In the long term, these capabilities must become ingrained into the renewable energy business structure. Amid challenging market conditions and mixed signals, renewables portfolio owners cannot afford to delay their “coming of age” as they evolve from financial investors into energy companies.

Today’s uncertainty will lead funds and independent investors to equip themselves with the tools and capabilities they need to protect their returns and succeed in the new world of energy trading. This should be cause for optimism as we wait to hear what our governments have in store.

Michael Waldner is CEO and co-founder of Pexapark

What Are The Main Benefits Of Comparing Car Insurance Quotes Online

LOS ANGELES, CA / ACCESSWIRE / June 24, 2020, / Compare-autoinsurance.Org has launched a new blog post that presents the main benefits of comparing multiple car insurance quotes. For more info and free online quotes, please visit https://compare-autoinsurance.Org/the-advantages-of-comparing-prices-with-car-insurance-quotes-online/ The modern society has numerous technological advantages. One important advantage is the speed at which information is sent and received. With the help of the internet, the shopping habits of many persons have drastically changed. The car insurance industry hasn't remained untouched by these changes. On the internet, drivers can compare insurance prices and find out which sellers have the best offers. View photos The advantages of comparing online car insurance quotes are the following: Online quotes can be obtained from anywhere and at any time. Unlike physical insurance agencies, websites don't have a specific schedule and they are available at any time. Drivers that have busy working schedules, can compare quotes from anywhere and at any time, even at midnight. Multiple choices. Almost all insurance providers, no matter if they are well-known brands or just local insurers, have an online presence. Online quotes will allow policyholders the chance to discover multiple insurance companies and check their prices. Drivers are no longer required to get quotes from just a few known insurance companies. Also, local and regional insurers can provide lower insurance rates for the same services. Accurate insurance estimates. Online quotes can only be accurate if the customers provide accurate and real info about their car models and driving history. Lying about past driving incidents can make the price estimates to be lower, but when dealing with an insurance company lying to them is useless. Usually, insurance companies will do research about a potential customer before granting him coverage. Online quotes can be sorted easily. Although drivers are recommended to not choose a policy just based on its price, drivers can easily sort quotes by insurance price. Using brokerage websites will allow drivers to get quotes from multiple insurers, thus making the comparison faster and easier. For additional info, money-saving tips, and free car insurance quotes, visit https://compare-autoinsurance.Org/ Compare-autoinsurance.Org is an online provider of life, home, health, and auto insurance quotes. This website is unique because it does not simply stick to one kind of insurance provider, but brings the clients the best deals from many different online insurance carriers. In this way, clients have access to offers from multiple carriers all in one place: this website. On this site, customers have access to quotes for insurance plans from various agencies, such as local or nationwide agencies, brand names insurance companies, etc. "Online quotes can easily help drivers obtain better car insurance deals. All they have to do is to complete an online form with accurate and real info, then compare prices", said Russell Rabichev, Marketing Director of Internet Marketing Company. CONTACT: Company Name: Internet Marketing CompanyPerson for contact Name: Gurgu CPhone Number: (818) 359-3898Email: [email protected]: https://compare-autoinsurance.Org/ SOURCE: Compare-autoinsurance.Org View source version on accesswire.Com:https://www.Accesswire.Com/595055/What-Are-The-Main-Benefits-Of-Comparing-Car-Insurance-Quotes-Online View photos