Weather-Trading – 03.05.2021

Short-range (front months:1+2 and front Quarter)

Portfolio:

• 20 MW front quarter
• 60 MW front month

• WRM(e)+PV/Jet+SRA

  • Looks to be a modest bull signal into the week but we are not 100% on a solid WDC path
  • MJO, WRM and PV-Greenland part is a risk for change in forecats and less stable pattern

• Statistics – normal vs WRM+PV/Je

  • May has the possibility to see solid CWW periods as it looks now
  • Statistics show that May often trends stronger CWW later into May, and can have a “bull” start

• Volatility forecasts – “strategy”

  • The large spread between runs and WRM effect do point towards moderate to high risk

• Hydbal/Inflow/Wind/Temp/Flow

  • Into the week we see bull support from low inflow and temps, and the windy period looks to have a limited impact on water values
  • DEU sees strong prices

• NC SYS price vs. futures

  • SYS price supports a bull outlook into the week, even with some windy days, since temps and inflow is low

• DEU vs. NC prices

  • A large gap to DEU is a bull motivator

• Fundamental market models and thermal-carbon

  • Futures vs. market models
    • Market models support current prices and show a bull potential
  • Thermal and Carbon
    • Carbon and thermal looks strong and is a bull motivator for NC at current NC vs DEU prices and low Hydbal

Weather-trading and hedging: short-range

(Trading will be done stepwise and per step, we need profit on each step and a confirmed WRM+PV/Jet analysis. If no profit awaits confirmation or close positions. Portfolio: 60 MW monthly (1-3) and 20 MW front quarter)

• Week 18-19
  • If a confirmed WRM-WDC response and also seen solid in PV
    • => Mon-Tue long Q3 2021: 2-3 MW
    • But, not until I have seen EC00 ens mean on Monday
    • Hold positions until late week 18 and possible into week 19
• Week 19-21
  • If lasting WRM-CWW signal and no solid PV-WDC setup
    • => Short-sell June and Q3 2021

• Hedging

  • For now, there is not possible to call off solid CWW/WWW periods into May
  • Based on the current setup short term heading is suggested since a CWW May will lower prices significantly for June and possible July
    • => But we need higher precip and not just windy days for this
    • => Week 18 will be very important for the wet risk into week 19-21

Weather-trading and hedging: medium-range

• Timing of hedging – medium time frame

  • Medium-term analysis shows that a CWW May often gets offsets by dry periods thereafter
  • Thus, accumulated we are closer to normal into the summer
  • The Gap to DEU support  NC prices and when Hydbal gets lower again price will rise closer to DEU

• Correction of portfolios

  • Especially if we see accumulated dry over the summer that will be needed since then the Gap between NC and Germany will be less => hedging prices are about  28-30 Euro for large companies
  • Into the winter new UK cable and low SE nuclear power production, as seen this winter, has strong bull potential during CDC periods regardless of Hydbal as long as inflow, wind and temps are low…