November 2008 - In its role as convener of the Green Power Market Development Group (GPMDG), the World Resources Institute has released a Request for Information to renewable energy suppliers in 16 U.S. states with competitive retail electricity markets, plus the District of Columbia. The RFI is "meant to generate information necessary to assess the feasibility and attractiveness of renewable power hedge transactions for commercial and industrial facilities."
Hedge transactions protect or exempt a renewable energy purchaser from fossil fuel costs. Even though most renewable power sources are free of fuel costs, some renewable energy retail customers in the U.S. do not receive an exemption from fossil-fuel related costs and are not protected from price increases and the financial risks associated with their volatility. Through the GPMDG RFI, the large retail customers are seeking to obtain protection from fuel price volatility, reducing their exposure to these risks.
Under the RFI, the prospective customers seek to identify and compare renewable energy supply options and contract structures that convey hedge value and obtain indicative pricing. The two main hedge structures the customers are focusing on are fixed price supply contracts and "contracts-for-differences," both of which achieve the result of shielding the customer from variations in fossil fuel costs to the extent of the renewable energy purchase.
More Information - WRI Request for Information
WRI Contacts: Robert Heilmayr and Alex Perera