Abstract
This Energy Insights report examines the viability of incorporating renewables
as a utility hedge strategy against fossil fuel price fluctuations and
potential environmental compliance costs. After presenting the theoretical and
practical underpinnings behind the hedging concept, as well as some of the
barriers to its adoption, we profile three utilities to illustrate real-world
implementation examples.
According to Nadav Enbar, research analyst, Energy Insights, "Pronounced
natural gas price volatility and other compliance risks encourage the utility
acquisition of fixed-price resources, particularly renewables, on a purely
economic basis. However, most utilities do not currently account for the hedge
value of renewables and thus do not recognize the resource' s full value."
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