Around the same time every year – typically in mid-November during a spell of particularly awful weather – the UK renewable energy trade press receives a flurry of press releases announcing that wind farms around the country have set new generation records.
It’s great to celebrate these successes, and, as the capacity and performance of wind energy assets continues to increase, these milestones represent considerable progress in the integration of clean energy into the grid.
But what happens when the wind doesn’t blow? Worldwide, wind energy markets that are seeing record-breaking generation levels are also seeing record-breaking production shortfalls.
Back in 2015, wind speeds fell by as much as 40% from long term averages across the vast majority of North America, including the key wind markets of Texas and California. The financial impact of the unexpected dip in production was cited in the results of major utilities, many of which saw below-par performance across their entire portfolios.
Two years on, the global wind energy sector – spurred on by further reports of low wind speeds worldwide, from Germany to Australia – is making a concerted effort to avoid a repeat incident. Strategies from portfolio diversification to adoption of financial hedging mechanisms have seen increasing uptake as asset owners have sought to mitigate the impact of any future resource volatility on production, financial performance and, ultimately, the value of their assets.
It’s no secret that wind power production depends on the weather – and the sector can hardly be blamed for the fickle nature of the resource. But, as the wind industry expands, so too does the scale of its responsibility - to its financiers, to its workforce, and to the general public.
As the market for weather risk management has grown in recent months and years, this responsibility has, in turn, given rise to a number of core communications challenges – not just for the sector as a whole, but for a number of key players within it.
6 Key Players in the Wind Sector and Their Communications Challenges
1) The wind energy sector
Challenge: How to raise awareness and understanding of the financial challenges posed by and causes of resource volatility, while simultaneously safeguarding the international reputation of wind energy as a reliable source of power
2) The wind energy generator
Challenge: How to communicate the effects of low wind speeds on revenues, both to investors and the general public, while maintaining their confidence in the ability of assets to deliver stable returns
3) The asset manager
Challenge: How to show appreciation of the risks inherent in wind energy operations and an understanding of the numerous options available for mitigating revenue volatility
4) The weather risk transfer provider
Challenge: How to demonstrate the value of a complex product, that has historically been difficult to structure and sell, but has now improved and may ultimately be essential in a post-subsidy environment
5) The resource analyst
Challenge: How to illustrate the importance of investing in the most extensive and reliable data at the assessment phase, at a time when unforeseen climate phenomena are undermining production forecasts and financial estimates
6) The weather expert
Challenge: How to encourage wind energy investors to rethink their approach with portfolio diversification strategies that enable ‘climate resilience’
Ultimately, the theme that unites all of these communications challenges is how to sell the ‘bad news’ about the reality of wind energy underperformance, and use it to bring about a positive – whether it be the sale of a single proxy revenue swap, a change to public perceptions, or an increasing standard of weather risk management in the industry. It’s all very well talking about generation records, but finding a way to talk about shortfalls can also be hugely advantageous.
If you would like to know more about the particular challenges faced by the wind energy generator, the asset manager and the resource analyst, alongside the wind energy sector as a whole, and learn how they can be managed, check out Resource, Revenues and Reputation: Inspiring Confidence in Future Performance.
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