The Renewable Energy Hub Marketplace project will develop new hedge contracts designed for clean energy technologies and host them on a digital firming marketplace.
- The Renewable Energy Hub (the Hub) developed a suite of new financial hedge contracts tailored for both variable renewable energy and clean dispatchable capacity assets.
- These hedge instruments are designed to create a liquid forward market and open the door to new sources of revenue for clean energy providers.
- The new hedge contracts are expected to contribute to managing risk and volatility of the changing supply/demand and price dynamics in the NEM, enabling energy retailers and their customers to hedge the price of electricity in a high renewables system.
- The products have been well received by the market with the first virtual storage deal transacted between Hydro Tasmania, Macquarie and Shell.
- The Hub has also built a digital trading platform (CORE Markets) as a point of market access for new and emerging clean energy providers.
- This tool enables market participants such as wholesale energy traders, energy and carbon portfolio managers to access live market pricing; value assessment of these hedge contracts and evaluation of the risks of different contract positions under a range of scenarios.
Report: Renewable Energy Hub Lessons Learnt Report 2
The Renewable Energy Hub project aims to develop a suite of innovative, standardised hedge contracts that are suited to both variable renewable energy generators and new sources of clean dispatchable capacity, as well as the changing needs of energy retailers and large customers.
The Renewable Energy Hub Marketplace project acknowledges the rapid transition to a high renewable energy system has implications for electricity retailers and large users managing their exposure to wholesale prices using the current suite of hedge contracts traded in- market. Similarly, the ability of new clean energy projects, both variable and dispatchable, to meet the specifications of standard hedge contracts is limited, thus precluding them from an important source of forward revenue and risk management.
In a high renewable energy system there must be appropriately designed contracts to enable clean energy projects, energy retailers and large customers to manage risk.
The project will engage with a broad range of stakeholders, including its Market Advisory Group, to develop specifications for a suite of new hedge contracts that are suited to both clean energy technologies, and the needs of energy retailers and large customers.
The project will also develop a digital platform that will enable prospective counterparties to access live market pricing, assess the value of the new hedge contracts, evaluate the risks of different contract positions under a range of scenarios and provide a point of market access for new and emerging clean energy providers.
The Renewable Energy Hub Marketplace project will facilitate trade in contracts that reflect the ‘profile’ of renewable generation, filling a gap in risk management products and overcoming a market barrier for clean energy technologies.
These products, and the digital marketplace that will support them, will provide the price signal required for market participants to seek out assets – such as batteries and other ‘balancing’ resources, that can firm up Australia’s rapidly-growing fleet of renewables generators.
This effectively turns a financial firming solution into a physical firming solution, hastening the arrival of those storage and other balancing resources required to help the energy system make the required transition to 100% renewables.