Windpower Engineering & Development

  • Home
  • Articles
    • Most recent posts
    • News
    • Featured
  • Resources
    • Digital issues
    • Podcasts
    • Suppliers
    • Webinars
    • Events
  • Videos
  • 2025 Leadership
    • 2024 Winners
    • 2023 Winners
    • 2022 Winners
  • Magazine
  • Advertise
  • Subscribe

Allianz Risk Transfer and partners develop innovative swap solution to hedge volatile revenues of wind farms

By Paul Dvorak | May 11, 2016

Allianz Risk Transfer (Bermuda) Limited (ART) and partners have developed an innovative risk management solution for hedging wind volume risks for wind farms. ART has executed a 10-year Proxy Revenue Swap with Capital Power’s Bloom Wind Farm, slated for constructed near Dodge City, Kansas.

Bloom Wind, a 178-MW wind farm on privately-owned lands, is scheduled to being construction in July 2016. Located within one of the strongest wind regimes in the U.S, the average wind speed is over 9 m/s.

Bloom Wind, a 178-MW wind farm on privately-owned lands, is scheduled to being construction in July 2016. Located within one of the strongest wind regimes in the U.S, the average wind speed is over 9 m/s.

This new risk management tool for the wind power industry was created and commercialized through a partnership amongst ART, Nephila Capital Limited (Nephila), REsurety, Inc (REsurety) and Altenex, LLC (Altenex). The 10-year agreement will secure long-term predictable revenues and mitigate power generation volume uncertainty related to wind resources for the 178 MW Bloom Wind Farm.

“This new product line for the wind power industry will enable more efficient and cost-effective financing of wind generation projects,” said Karsten Berlage, Managing Director of ART. Due to the high upfront cost of modern utility-scale wind projects, it is important for investors in such projects to be able to secure long term stable revenues to underpin the investment.

Previously, traditional price-focused hedging solutions have been commonly used to try to address this, but this newly created Proxy Revenue Swap offers an entirely new form of revenue risk management for the wind power industry. Similar in concept to a tolling agreement or capacity payment, this novel structure swaps the floating revenues of a wind farm – those driven by the hourly wind resource and power prices – for a fixed annual payment. This transaction is the first in a robust pipeline of future wind financings and would also be feasible in other wind farm markets globally beyond the US.

The ART-led swap is unique in several aspects. “Recent advances in data availability for the US wind market as well as in risk assessment and modeling allowed this unprecedented scope of risk transfer within a single product, which is available for up to 10 years,” explained Berlage. “In contrast to more short-term and price-focused hedging approaches, for the first time price and wind volume risks of a wind farm have been managed at the tenor needed to support a project’s capital structure and balance sheet,” Berlage continues. “The result is a level of revenue certainty never before available to the wind industry.”

Each partner contributed highly specialized expertise to create this innovative swap solution. ART and Nephila leveraged their collective weather risk transfer expertise, risk capacity, underwriting sophistication and credit strength. REsurety has provided the specialized risk analyses relied upon for the structuring of the Proxy Revenue Swap and delivers ongoing services as the calculation agent for the transaction. Altenex supports the management of power price-linked risk as part of the Proxy Revenue Swap structure.

ART and Nephila have a long-standing partnership in the weather and catastrophe risk markets and have worked with REsurety since 2012 to develop risk transfer products for the wind power industry. More recently, through a partnership established between REsurety and Altenex in 2015, protection against low wind output has been expanded to include power price risk as well as generation volume-linked risk exposures.


Filed Under: Financing, News
Tagged With: allianz risk transfer
 

About The Author

Paul Dvorak

Related Articles Read More >

US government allows Empire Wind offshore project to resume construction
Richardson Electronics to deliver pitch energy modules to TransAlta wind fleets
Equinor halts work on Empire Wind offshore project after federal government order
ARESCA wants input on offshore wind standards

Podcasts

Wind Spotlight: Looking back at a year of Thrive with ZF Wind Power
See More >

Windpower Engineering & Development Digital Edition

Digital Edition

Browse the most current issue of Windpower Engineering & Development and back issues in an easy to use high quality format. Clip, share and download with the leading wind power engineering magazine today.

Windpower Engineering & Development
  • Wind Articles
  • Solar Power World
  • Subscribe to Windpower Engineering
  • About Us/Contact Us

Copyright © 2025 WTWH Media LLC. All Rights Reserved. The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of WTWH Media
Privacy Policy | Advertising

Search Windpower Engineering & Development

  • Home
  • Articles
    • Most recent posts
    • News
    • Featured
  • Resources
    • Digital issues
    • Podcasts
    • Suppliers
    • Webinars
    • Events
  • Videos
  • 2025 Leadership
    • 2024 Winners
    • 2023 Winners
    • 2022 Winners
  • Magazine
  • Advertise
  • Subscribe