CEU Electronic Theses and Dissertations, 2014
| Author | Perry, Aaron Themus |
|---|---|
| Title | Investment come rain or shine: Renewable energy exposure to weather risk, use of weather derivatives, and potential impacts |
| Summary | Weather derivatives are a relatively new financial product that have been used by energy companies to manage the volume risk associated with energy demand. It has been demonstrated that the use of these products can impact company value. The output of renewable energy plants, and therefore income from those plants, is related to the weather. Renewable companies are potential users of these weather derivative products. This thesis examines the extent to which weather variability affects renewables and the wider power market, how the use of weather derivatives could impact investment in renewables, and the current state and future of the weather derivatives market for renewables. A trio of research methodologies are used, including statistical analysis, interviews, and a review of annual reports. Weather derivative use can impact the investment in renewable energy, and there are several cases where they were explicitly used in financing, however, because they are not used regularly it was difficult to measure this effect on a wider scale. ‘Alternative energy’ companies were not found to have a significant linear correlation with wind speed, cloud cover, or precipitation, however lack of data and other factors affected the significance of these results. The weather derivatives market is growing slowly, with most of this growth coming from the over the counter trading. Products that could be used by renewable energy companies are in the minority, and the number of those products actually used by renewables is even smaller, but there are several isolated examples of their use. |
| Supervisor | Labelle, Michael |
| Department | Environment Sciences and Policy MSc |
| Full text | https://www.etd.ceu.edu/2014/perry_aaron.pdf |
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