How is enwex calculated?
Day ahead settlement data of Enwex indices are calculated using the operational run of European weather model ECMWF. Its gridpoint forecasts in 0.25° spatial resolution and hourly timesteps are basis for the calculation. Formula needed for translation into wind or solar power utilization is published to grant full transparency.
Enwex indices are the best compromise between simplicity for markets and full representation of the underlying weather parameter. They precisely meet weather driven volatility and are easily applicable to each country or region.
Enwex indices are calculated as countrywide means and provide a day ahead settlement as known from power and gas markets. Hourly granularity of the indices allows the trading of multiple of hour contracts, from calendar years and quartals to months, weeks / weekends and days.
These are just some of the lessons learned from limited acceptance of other weather derivative products yet.
Spatial weightings per country and parameter are yearly reviewed according to installed capacity data published, for Germany e.g. by Bundesnetzagentur. A full documentation also on the update procedure can be found here.
How to calculate enwex temperature
Temperature in °C correspond to prices in €, e.g. 10,25° means 10,25€. Price calculated out of hourly grid point forecasts for day ahead (local time) 2m temperature.
Reference locations per market are weighted using population density. So Enwex method provides a very easy approach to hedge temperature driven gas demand volatility.
How to calculate enwex wind
The price is representing a percentage value of utilized installed capacity for a country, e.g. 30,00% means 30,00€
This outcome is similar to recent wind indices such as NAREX Wind index, but calculation has been strongly simplified with very similar accuracy.
Some representative grid points, e.g. 12 for Germany, are taken into just one formula to translate windspeed into utilization to meet a correlation of e.g. 97,6% for 2022 published windpower data.
Enwex method allows hedging weather without black boxes, also allowing traders to calculate actual index values in their own spreadsheets.
How to calculate enwex solar
Solar index with its strong intraday volatility taking most profit of the hourly granularity and multiple of hours structure of Enwex.
Spatial weighting of Enwex solar follows the same rules as for Enwex wind, weather parameter used for solar is the total radiation.
Differing angles and orientations of solar plants are not represented, nevertheless Enwex solar reaching a very low RMSE and can easily be used to hedge PPAs, market values or capture rates.
