Financial technology provider and exchange operator Intercontinental Exchange (ICE) announced its entry into climatic variable contracts, starting off with the upcoming launch of a series of new wind generation futures designed to enable energy market participants to manage risks associated with fluctuations in renewable power generation.

ICE operates global exchanges and clearing houses and provides data, technology and listings services. The firm’s energy markets include futures and options contracts covering oil, natural gas, electricity and environmental products.

According to ICE, the launch comes as wind power accounts for a growing share of European electricity generation, creating increased exposure to weather-related fluctuations in supply. Combined with ICE’s European power futures, the new contracts will enable wind producers, utilities, suppliers and buyers under power purchase agreements (PPAs) to manage both wind generation volume risk and electricity price risk, the company said.

Gordon Bennett, Managing Director, Utility Markets at ICE, said:

“Climatic variable futures are a natural addition to the energy markets we already offer. Wind volume is now a significant part of the power sector, and customers want a way to manage it alongside what they already trade with us. Our energy and environmental portfolio allow participants to hedge across commodities, hubs and time periods, and to manage the links between natural gas, power and carbon in one place.”

The new launch will include 15 cash-settled wind futures are based on wind power output indices in seven countries including Denmark, France, Germany, Italy, the Netherlands, Spain and the UK. The contracts will cover onshore wind, offshore wind, and the two combined, depending on the country.

The indices underlying the contract will be provided by weather and renewable energy index provide ENWEX.

Robin Girmes, Managing Director at ENWEX, said:

“As renewable generation grows, managing weather-driven volume risk is increasingly essential, particularly in the expanding market for renewable power purchase agreements. We believe transparent, standardized and independently calculated indices are fundamental to making renewable energy generation risks measurable, tradable and hedgeable.”