ENERGY RISK SOLUTIONS_NEWFORMAT_14.02.18
  • Start
  • About Us
    • Management and Partners
    • Management Achievements
  • Origination
    • Why Outsourcing Origination
    • Financial vs. Physical Hedging
    • Weather Hedging >
      • Products
      • Markets
    • Renewables >
      • Wind Exposure Hedging
      • Pure Wind Speed Hedges
      • Basis Risk and Production Guarantees
    • Corporate PPAs >
      • Why buying CPPAs
      • Who is buying CPPAs
      • Structures and Prices
      • Example
    • Natural Gas
    • Xcommodities
  • Consulting and Projects
    • Projects
    • Market Entry
  • Contact

Financial vs. Physical Hedginge

Hedges might be arranged and executed on a financial or a physical basis, choice depends of structure of exposure and preferences of the client.

Financial

  • Structures might be tailored to the even utmost complicate exposure
  • For weather risk takers weather is core competence, other than their physical peers they provide hedges against almost any kind of exposure
  • Weather exposures of the thermal energy industry can be hedged almost without any basis risk
  • Regionally distributed exposures are hedgeable by basket approaches
  • Whilst remaining basis risk is mostly neglectible for thermal energy clients it's bigger for Renewables
  • For the latter ERS is able to provide innovative solutions
  • ​High client protection as financial business is heavily regulated​

Physical

  • Weather derivatives might also be embedded into physical energy delivery or offtake contracts 
  • For physical risk takers weather is not core competence so they only offer it on an opportunistic basis or hedge themselves out in the financial markets
  • There are also accounting and reporting differences between physical and financial transactions, for financial transactions risk takers normally take care of this​
© 2020 Energy Risk Solutions GmbH
  • Start
  • About Us
    • Management and Partners
    • Management Achievements
  • Origination
    • Why Outsourcing Origination
    • Financial vs. Physical Hedging
    • Weather Hedging >
      • Products
      • Markets
    • Renewables >
      • Wind Exposure Hedging
      • Pure Wind Speed Hedges
      • Basis Risk and Production Guarantees
    • Corporate PPAs >
      • Why buying CPPAs
      • Who is buying CPPAs
      • Structures and Prices
      • Example
    • Natural Gas
    • Xcommodities
  • Consulting and Projects
    • Projects
    • Market Entry
  • Contact