We provide risk capacity to participants in the energy market. We can structure, price, and transact derivatives with energy market participants, offering them the opportunity to transfer weather risks from their books to our portfolio.
Utilizing station observations and gridded ERA5 wind, solar irradiance and precipitation data, a time series can be constructed to provide the underlying index for hedging products designed for the energy industries. Structures can be traded at any global location and any tenor, which minimizes basis risk.
In this use case, an Energy Trading Desk is concerned about higher than normal power demand. This contract example provides a financial hedge against increased power demand.
Energy Trading Desk
Higher Power Demand
Temperature
GHCN-D Laguardia Airport
New York
A call option that pays when seasonal Heating Degree Day (HDD) accumulation is 0.5 standard deviations above the 10-year average
Tick * max (Seasonal HDD Accumulation - Strike, 0)
A defined USD/HDD Tick that correlates well to the trading desk’s exposure in the market
In this use case, an Energy Trading Desk has a need to hedge against lower than normal wind generation. This contract example provides a financial hedge against low generation and potential adverse prices moves in power market position.
Energy Trading Desk
Lower Wind Generation
Wind
Transformed ERA5 Wind
Germany
A put option that pays when monthly accumulated wind generation is 0.5 standard deviations below the 10-year average
Tick * max (Strike - Wind Generation, 0)
A defined EUR/MWh Tick that correlates well to the trading desk’s exposure in the market
In this use case, a Private Equity Firm has a need to hedge against lower than normal wind generation. This contract example provides a hedge revenue to smooth out losses incurred when buying real-time power to fulfill contracted generation.
Private Equity
Cloudier Than Average
Solar
ERA5 Solar Irradiance
Texas
A put option that pays when the monthly solar generation is less than 97% of normal
Tick * max (Strike - Solar Generation, 0)
Defined by a predetermined $/MWh tick that is similar to PPA contracted generation
We can structure and build a program for almost anything. We specialize in building customized climate solutions to fit the needs of your business and clients.
Our proprietary pricing platform will get a quote for your business light years faster than the rest of the industry.
When your selected triggers are met, you get a rapid payout without the mountains of paperwork, months-long settlement process, or needless disputes.
Explore our FAQ to learn how Arbol leverages technology for parametric insurance, managing climate risks effectively for diverse industries.
Parametric insurance is a type of insurance that pays out when a specific event occurs, rather than based on the actual loss incurred. It uses predefined parameters or triggers, such as a certain amount of rainfall, wind speed, or temperature, to determine when a payout is made.
This differs from traditional insurance, which requires an assessment of the actual damage before a claim is paid out. Parametric insurance offers faster, more transparent, and more predictable payouts.
Parametric insurance offers several benefits over traditional insurance, including:
Arbol’s insurance products benefit a wide range of customers exposed to financial risks due to adverse weather conditions, including:
Arbol covers a wide range of climate and weather-related perils, including but not limited to:
These coverages help protect businesses and individuals against the financial impacts of adverse weather conditions and climate events. Arbol can also cover perils/risks not listed here. Please reach out to our team for more information on customized solutions and products.
Are you interested in our products and want to request pricing tailored to your needs? Fill out our form and our team will provide you with a personalized quote.
