Abstract
This Energy Insights report examines the viability of incorporating renewables as a utility hedge strategy against fossil fuel price fluctuations and potential environmental compliance costs. After presenting the theoretical and practical underpinnings behind the hedging concept, as well as some of the barriers to its adoption, we profile three utilities to illustrate real-world implementation examples.
According to Nadav Enbar, research analyst, Energy Insights, "Pronounced natural gas price volatility and other compliance risks encourage the utility acquisition of fixed-price resources, particularly renewables, on a purely economic basis. However, most utilities do not currently account for the hedge value of renewables and thus do not recognize the resource' s full value."
Table of Contents
- Table of Contents
- Energy Insights Opinion
- In This Report
- Brief Description of the Solution
- Situation Overview
- Natural Gas Price Volatility
- Figure: Natural Gas Prices, 1999-2012
- Environmental and GHG Compliance Costs
- Supporting RE Hedge Strategies from the Ivory Tower
- Figure: Engineering Estimates Versus Risk-Adjusted Estimates
- Figure: NYMEX Forward Prices Exceed AEO Forecasts, 2007-2030
- Utility Planning Risk Hedge Approach
- Hedge Strategy Criticisms and Institutional Barriers
- Utility Case Studies
- Table: Utility Case Study Snapshots
- Austin Energy
- Figure: Austin Energy' s GreenChoice Program
- MidAmerican Energy
- Figure: 1.5MW Turbines at MEC' s 175.5MW Intrepid Wind Project
- Xcel Energy
- Future Outlook
- Essential Guidance
- Actions to Consider
- Learn More
- Related Research
- Energy Insights Research
- Other Research
- Synopsis
- Related Research
