A report by Framingham-based Energy Insights finds that renewable energy could become a decent utility hedge strategy.
The report is called Renewable Energy as a Utility Hedge Strategy, and it argues that renewable energy resources offer utilities a way to shield themselves from financial losses caused by erratic fossil fuel prices and supply interruptions.
Nadav Enbar, co-author of the report, said “natural gas price volatility” and other risks have driven utilities toward “fixed price resources, particularly renewables, on a purely economic basis.”
Also, Enbar said utilities undervalue renewable energy because it’s thought to be intermittent and unreliable, which is hampering renewable energy’s adoption as a risk hedge.
But utilities “are steadily integrating a rising level of risk assessment into their strategic planning efforts,” Enbar said. Gas price fluctuations, and future environmental compliance costs “will encourage a fundamental rethinking of the value of renewable energy and its role within utility portfolios.”
