One of the biggest problems for the wind industry is that the wind doesn’t always blow when we want it to. That makes it harder to get financing for wind projects, and raises the cost of capital.
Now there’s a financial instrument that hedges against that risk.
3TIER’s wind modeling data generates historical data on wind speeds which makes on-site measurements more accurate. It isolates wind speeds from other factors that can impact power production.
Based on that information, Galileo‘s WindLockT financial product provides wind prices based on expected variability. WindLockT products are indexed to wind-driven megawatt-hours allowing for the utilization of a power curve to provide accurate mapping of wind speed to generation.
The companies say their joint effort creates a new global market for financial wind risk management products designed to ease financing pressure on wind projects, where the cost of financing often includes large premiums built in to cover production uncertainty.
"Wind energy is experiencing strong growth globally and the natural variability of wind has led to conservative financing and a relatively high cost of capital," says Martin Malinow, Galileo CEO. "Working together with 3TIER, Galileo can now offer developers and financiers an important tool to manage the uncertainty of wind-driven earnings which will create greater capital market access and potentially a lower cost of capital for new projects or refinancings."
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