Solving for Energy Price Volatility
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In the wake of the Russia-Ukraine war, the heightened volatility in energy prices has underscored the critical importance of embedding energy security and price stability into national energy policies and investment frameworks. These challenges are reshaping the strategic landscape, compelling governments, industries, and investors to re-evaluate how they balance affordability, sustainability, and security in energy systems.
Both energy generators and consumers are seeking economic stabilisers that encourage further investment in renewable energy assets while ensuring low-cost generation to mitigate the ongoing cost-of-living crisis. For generators, the need for stability has become paramount to support business resilience and expand renewable infrastructure. For consumers, affordability has become a pressing concern as fluctuating energy costs directly impact household and industrial budgets.
Traditionally, renewable energy generators have achieved price certainty through long-term power purchase agreements (PPAs). While these contracts offer stability, they often come with significant trade-offs. Generators lock-in pricing at a steep discount to fair market value and thereby, limiting their ability to capitalize on future merchant revenue upside. This restricts potential returns, as well as the availability of capital that could otherwise be reinvested into additional generation capacity—a process that ultimately helps lower overall energy costs through economies of scale and technological advancements.
Paratus provides an innovative insurance solution to address these challenges through its bespoke renewable power insurance product. The product enables generators to safeguard their revenues against adverse price movements while preserving their ability to benefit from upward price trends. Unlike PPAs, this approach allows generators to retain merchant upside while reducing downside risks, improving internal rates of return (IRRs) and enhancing the financial attractiveness of renewable energy investments. In addition, Paratus is also able to provide physical power ‘Route-to-Market’ services for generation and demand assets.
The Paratus renewable power insurance product is licensed and regulated by the Guernsey Financial Services Commission (GFSC), providing assurance of its compliance with rigorous regulatory standards. This level of oversight underscores the product’s reliability and positions it as a critical tool for renewable energy generators navigating an increasingly complex and volatile market landscape.
By bridging the gap between price stability and revenue flexibility, the Paratus product supports the broader transition to renewable energy, enabling generators to optimise their financial performance while contributing to the global goals of energy affordability and sustainability.