Enwex FAQ
Enwex (Energy Weather Index) transforms meteorological data into standardised, transparent and tradable indices. The indices enable market participants to systematically hedge weather-related volume risks in electricity and gas markets and stabilise cash flows.
Enwex provides indices for temperature, solar, onshore wind, offshore wind and total wind across multiple European countries as well as markets in North America, Asia and Australia.
The indices are calculated on an hourly basis for the following day (day-ahead). Settlement values are published daily on the Enwex website and are also available via API.
The Enwex Temperature Index represents the population-weighted temperature of a region in °C.
The Enwex Solar Index represents the weighted percentage utilisation of installed photovoltaic capacity in a region.
The Enwex Onshore Wind, Offshore Wind and Total Wind Indices represent the weighted percentage utilisation of the corresponding installed wind capacity in a region.
Established energy-market hedging instruments primarily address price risk. Weather-driven volume risk, by contrast, has traditionally been difficult to hedge in a standardised and scalable way.
Fluctuations in wind, solar and temperature lead to unpredictable renewable generation volumes, basis risks in PPAs, earnings volatility and unhedged volume exposures. As the share of renewable energy in the energy system increases, these risks become increasingly important.
Enwex makes weather-driven volume risks measurable, standardisable and tradable, helping market participants reduce cash-flow volatility.
Enwex is particularly relevant for:
In short: if your financial performance is influenced by sunshine, wind or temperature, Enwex may be relevant – including beyond the traditional energy sector.
Enwex indices are calculated using weather data from the European Centre for Medium-Range Weather Forecasts (ECMWF).
Depending on the index, relevant meteorological parameters such as 2-metre temperature, 100-metre wind speed or solar radiation are translated into hourly index values.
Regional values are aggregated using population weights for temperature and installed-capacity weights for wind and solar. This results in representative national or regional benchmarks while maintaining a transparent and reproducible methodology.
Yes. The Enwex Rulebook, which contains information on methodology, calculation methods and data sources, is freely available on the Enwex website.
Enwex indices are designed to closely reflect the weather-driven component of actual renewable generation.
For example, the hourly Enwex Onshore Wind Index for Germany shows a correlation of just under 0.91 with actual onshore wind generation, corresponding to an R² of approximately 82%.
Historical Enwex data can be requested to analyse the relationship between your own portfolio and the relevant Enwex index. This allows market participants to quantify portfolio-specific correlation and basis risk before entering into a hedge.
Traditional weather derivatives have often been based on individual weather stations. This can create local distortions and makes it difficult to develop standardised, scalable trading products.
Enwex instead aggregates weather information across an entire market area using spatial weighting. This reduces the influence of individual local observations and provides a benchmark that is more representative of national or regional electricity and gas markets.
Because energy markets themselves are predominantly organised at national or bidding-zone level, national and regional indices also provide a natural basis for standardised trading products.
For geographically diversified portfolios, aggregation can additionally reduce location-specific basis risk through portfolio effects.
Traditional weather derivatives have frequently relied on customised OTC structures and individual weather stations. While such contracts can be tailored to a specific exposure, customisation limits standardisation and makes it more difficult to concentrate liquidity.
Historically, different providers have also used different methodologies and reference data, making products difficult to compare.
Enwex addresses these limitations through transparent methodology, standardised national or regional benchmarks and a common underlying that can be used across different counterparties and trading venues.
Enwex indices are calculated for every hour and published for day-ahead.
Because the underlying values are hourly, contracts can be structured for different delivery periods, including individual days, weeks, months, quarters, seasons and years. Longer contracts can therefore also be cascaded into shorter delivery periods.
“MWh logic” means that Enwex indices are structured on an hourly basis so that weather exposure can be translated directly into energy-market quantities and cash flows.
For wind and solar, an index value represents the utilisation of installed capacity. For example:
100 MW installed capacity × 25% Enwex utilisation × 1 hour = 25 MWh of indexed generation.
This creates a direct link between installed capacity, weather-driven utilisation and energy volumes.
The hourly structure also allows larger trading contracts to be cascaded from annual products into quarters, months, weeks or days.
Temperature values in °C and percentage utilisation values for wind and solar can be translated into financial contract values.
For example, if one index point corresponds to €1, an Enwex Wind value of 20% corresponds to a contract price of €20. A change of one percentage point changes the contract value by €1 per lot and hour.
For wind and solar, one lot can represent 1 MW of installed capacity. A 5 MW position for a 720-hour month therefore represents:
5 MW × 720 hours = 3,600 lot-hours.
This allows weather-driven generation exposure to be translated directly into a standardised financial position.
The first step is to quantify the financial sensitivity of your portfolio to changes in temperature or renewable utilisation.
Temperature example
If a portfolio loses €1.5 million when the average January temperature is 1°C below the reference level, the approximate position is:
€1,500,000 / 744 hours ≈ 2,016 lots.
The corresponding short position generates a positive hedge cash flow when temperatures fall below the agreed reference level.
Wind example
Assume that a wind portfolio loses €75,000 for every percentage point by which March wind utilisation falls below the expected level.
The approximate position is:
€75,000 / 744 hours ≈ 101 lots.
The portfolio would therefore sell approximately 100 lots of March Wind.
These examples illustrate a pure volume hedge. The optimal hedge ratio for a specific portfolio may differ depending on its relationship with the national or regional index.
For a financial Enwex contract, the basic cash-flow logic is:
Buyer:
Cash flow = (Settlement Index − Contract Price) × hours × lots
Seller:
Cash flow = (Contract Price − Settlement Index) × hours × lots
The Settlement Index is the arithmetic mean of all relevant hourly Enwex values over the contract period.
For a monthly contract, for example, the settlement value is the monthly average of the hourly index values.
The traded contract price reflects market expectations for the index over the relevant delivery period. Historical averages can provide a reference, particularly for longer-dated contracts, while actual market prices may differ depending on weather expectations, market conditions and risk premia.
Traditional weather derivatives are often based on individual weather stations, while individually tailored hedges are specifically designed around a particular asset or portfolio.
Tailor-made structures can reduce asset-specific basis risk, but typically provide less standardisation and tradability.
Enwex takes a different approach: transparently weighted weather information is aggregated into national or regional benchmarks. This enables standardised contracts that can be compared and traded across different counterparties and trading venues.
The objective is therefore not to eliminate every element of basis risk, but to make a large share of weather-driven exposure transparent, quantifiable and tradable through a common benchmark.
Enwex is designed as an independent benchmark that can be used across multiple trading venues.
Enwex-based products can be traded on exchanges, OTC platforms, through brokers and in bilateral transactions. Current trading venues and products are listed on the Enwex website.
This multi-venue approach allows the same independent underlying to be used across different market structures.
Gas suppliers
Gas demand is strongly temperature-dependent. A supplier exposed to lower sales during a warm winter can buy the Enwex Temperature Index. Higher-than-expected temperatures then generate a positive hedge cash flow, while colder weather results in a payment in the opposite direction alongside higher gas sales.
Operators of heated or air-conditioned buildings
Operators of shopping centres, hotels and other temperature-sensitive buildings can hedge weather-driven energy costs. Cold winter temperatures can be hedged by selling the Temperature Index, while high summer temperatures and associated cooling costs can be hedged by buying it.
Wind farm operators
A fixed-price PPA stabilises the price received per MWh but does not eliminate uncertainty about how many MWh will actually be produced.
A wind farm operator can sell the Enwex Wind Index. During periods of low indexed wind generation, the hedge generates a positive cash flow that offsets lower PPA revenues. During periods of high wind generation, the hedge generates a payment in the opposite direction while the wind farm benefits from higher physical generation.
This creates a two-way, CfD-like hedge for weather-driven generation volumes.
Solar farm operators
The same principle applies to solar generation. A solar operator can sell the Enwex Solar Index to offset lower PPA revenues during periods of below-average solar generation.
During periods of above-average indexed generation, the payment direction reverses while physical PPA revenues increase.
Conventional generation
Operators of conventional generation assets may use Enwex Wind and Solar indices to hedge against periods of high renewable generation, which can reduce residual load, operating hours and margins for conventional plants.
An Enwex-based hedge can create an economically similar payoff structure to a 2-sided Contract for Difference (CfD) for weather-driven renewable generation volumes.
A renewable generator sells the relevant Wind or Solar Index at an agreed reference level. If indexed generation falls below that level, the hedge generates a positive cash flow. If indexed generation exceeds the reference level, the cash flow reverses.
Combined with a fixed electricity price, this addresses two different components of renewable revenue risk:
Electricity contract or price hedge → price risk
Enwex → weather-driven volume risk
Together, these instruments can move the economic exposure from merely fixing the price per produced MWh towards a more predictable revenue profile per MW of installed renewable capacity.
Unlike a project-specific CfD, Enwex uses a standardised national or regional benchmark. This makes the weather component comparable and potentially tradable across projects, counterparties and trading venues.
In standardised PPAs such as Pay-as-Indexed structures, Enwex can serve as a transparent settlement underlying for the weather-driven generation profile.
Instead of agreeing a fixed physical generation profile in MWh, market participants can trade installed capacity in MW. The hourly Enwex utilisation rate then determines the indexed generation volume.
For example:
100 MW capacity × 30% Enwex Wind = 30 MWh indexed generation for that hour.
This “Pay-as-Indexed” approach creates a common generation profile for all market participants using the same benchmark rather than relying on individually negotiated project profiles.
Standardisation can reduce negotiation and execution complexity, enable smaller contract sizes and shorter delivery periods, and make PPA positions more comparable and tradable.
Enwex-based structures can be used in both physical and financial transactions.
In a physical structure, the Enwex index determines an indexed hourly energy volume. For example, a 100 MW position and an Enwex Wind value of 20% correspond to 20 MWh of indexed energy for that hour. This volume can be integrated into the relevant physical delivery and balancing processes.
In a financial structure, no physical electricity delivery is required between the counterparties. Instead, the agreed financial contract is settled using the Enwex-based indexed volume together with the relevant price reference defined in the contract.
The exact settlement mechanics depend on the product and trading venue.
Wind, solar and temperature increasingly influence generation volumes, energy demand, market prices and portfolio volatility.
Traditional power futures and fixed-price PPAs primarily address price risk. They do not, by themselves, eliminate the weather-driven uncertainty surrounding renewable generation volumes.
Enwex adds a standardised and transparent benchmark for this volume component.
This is particularly relevant as renewable electricity markets increasingly use two-way CfD structures to stabilise revenues. While price-based CfDs can stabilise the price received for electricity, weather-driven generation volumes remain a separate source of uncertainty.
Enwex can complement price-based hedging structures by providing a standardised benchmark for this volume component, enabling market-based two-way CfD-like hedges for renewable generation.
Enwex covers a growing number of electricity and gas markets across Europe, North America, Asia and Australia.
The portfolio includes temperature, solar, onshore wind, offshore wind and total wind indices as well as indices relevant to major international gas markets.
For the current list of available countries, regions and indices, please refer to the Enwex website.
Enwex itself provides the independent index and settlement values.
Forecasts, forward curves and market analyses for Enwex indices are provided separately by Energy Weather.
This separation helps maintain a clear distinction between the independent benchmark and commercial forecasting or market-view services.
Daily Enwex settlement values are publicly available on the Enwex website.
For professional use, Enwex provides API access, including historical index data. Historical data can also be used to analyse the relationship between an individual portfolio and the relevant Enwex benchmark.
Trial API access is available on request.
Getting started typically involves four steps:
For further information or trial access, please contact Enwex through the website.
Sie müssen den Inhalt von hCaptcha laden, um das Formular abzuschicken. Bitte beachten Sie, dass dabei Daten mit Drittanbietern ausgetauscht werden.
Mehr InformationenSie müssen den Inhalt von reCAPTCHA laden, um das Formular abzuschicken. Bitte beachten Sie, dass dabei Daten mit Drittanbietern ausgetauscht werden.
Mehr InformationenSie sehen gerade einen Platzhalterinhalt von Turnstile. Um auf den eigentlichen Inhalt zuzugreifen, klicken Sie auf die Schaltfläche unten. Bitte beachten Sie, dass dabei Daten an Drittanbieter weitergegeben werden.
Mehr Informationen