Weather Risk Transfer Solutions for Industries

This document is a technical report detailing innovative weather risk transfer solutions offered by Munich Re for various industry sectors. It outlines the challenge faced by clients, particularly in the renewable energy sector, regarding power price cannibalisation due to increased wind production. The report presents a specific use case involving a power utility in Germany that experiences lower realised power prices compared to average prices. It explains how a customised index can be developed based on asset location, or alternatively, a standardised index can be utilized. The document describes the derivative structure designed to provide payouts when the index falls below a predetermined threshold, known as the strike. The payout is calculated based on the difference between the strike and the index, multiplied by an agreed notional amount. Additionally, it provides contact information for further inquiries regarding the weather-related risk management solutions available.