JBP undertakes consultancy work to analyse weather-related risks to operations. Our work in Weather Derivatives spans a range of renewable energy operations, and may consider the number of stormy days affecting tidal power generation, cloudy days affecting solar power generation, or the frequency of wind speeds being below critical thresholds for power generation.
The limitations of existing products is often the level of analysis used to generate relationships between operations and weather, with any risk passed back into pricing strategies. By undertaking a bespoke analysis, which could include producer thresholds, numerical modelling and statistical analysis, an advanced relationship can be created to provide guidance on a more accurate, less risky hedge price.
Thresholds for payment
Using hindcast analysis and 'Gamer Mode' functionality, complete operations are modelled and the root cause (in terms of weather conditions) can be exposed. This then informs the weather parameters that are worth hedging, and ideal payment thresholds.
This analysis may be completed for customer or insurer. It provides justification for the level of cover required, the livelihood of claims, and allows a reduced premium cost through removing unnecessary cover.