Centrica, a U.K. electricity and gas supplier, is developing a derivatives strategy to hedge the wind exposure of its growing fleet of wind farms. Gearóid Lane, head of electricity supplies at Centrica Energy Management Group, said the company, which first expressed interest in wind derivatives last year (DW, 11/04), is now looking at swaps or options based on average wind speeds over an annual period.
Centrica will choose one of two strategies, Lane said. It will either be a standard product trading the average wind speeds of a general location, or a more customized product geared to a location close to the wind farm and linked to a formula based on wind speed, he added. The corporate has not chosen a counterparty.
Centrica opened a 26 megawatt wind farm in Aberdeenshire, Scotland, this year and a second 90 megawatt farm is under construction at Morecambe Bay, Cumbria, in a joint venture with Dong, a Danish energy firm. "We expect to have a big fleet of wind farms in the future," Lane said.
