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Management of Your Portfolio Hedging

As a supplier, one of your goals is to cover your supply portfolio to protect yourself from volume and price risks. Therefore, you must forecast the volume your clients will consume in the future, which can be relatively complex. Our offering provides you with the best support in building your hedging strategy

For who?

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Big consumers

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Suppliers

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Produceurs

Our solution contains

01

An effective forecasting method to cover your supply

Augmented Energy offers a long-term forecast for your portfolio. Each day, we generate a forecast of the net consumption and production in your portfolio at a half-hourly interval, from D+1 to Y+3.

As a supplier, you need to apply different forecasting methods depending on the contracts/profiles of your consumers. These are divided into three categories:

  • Forecast for Profiled Consumers (small consumers): Determine the number of consumers and their respective Usage Factor for each profile. Then, for each half-hour interval, multiply this Usage Factor (in kW) by a profile coefficient calculated by the Distribution System Operator (DSO) and adjusted to normal temperature to obtain an estimated load curve.

  • Forecast for Remote Metered Consumers (large-scale sites): Use the actual historical load curve, adjusted for weather anomalies, if the site is temperature-sensitive.

02

Forward transactions

Augmented Energy supports you in purchasing on the forward market.

Now that you have completed your forecasts and have your half-hourly load curves, the next step is to buy this energy through forward contracts. This step is not so simple, as the market is often incomplete. To optimize your purchases, “shaping” becomes essential

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03

Portfolio Hedging Optimization Tool (Shaping)

Through the Noos platform, you have access to a portfolio hedging optimization tool (shaping) and two interfaces: one for viewing completed transactions and another for displaying historical spot and forward prices. Augmented Energy integrates and accounts for your forward transactions.

What is shaping?

Your goal is to minimize the difference between your load curve (the gray curve) and the combination of PEAK & BASELOAD forward contracts (the red curve). In July, for example, the portfolio supply is over-covered, while in January, a small portion of supply remains uncovered. Shaping can be done in two ways:

- By Volume: Calculate the contract combination that minimizes the residual volume position (over-covered or under-covered).

- By Value: Calculate the contract combination that minimizes the residual position in euros. This approach is more effective but slightly more complex, as it requires the Hourly Price Forward Curve (HPFC). The load curve is multiplied by the HPFC, and contracts are purchased to best match this value. If the HPFC changes, the optimal contract combination will also vary, requiring the supplier to make new transactions.

04

Augmented Energy Supports You in Monitoring the Evolution of Your Purchases

Augmented Energy closely monitors the evolution of your portfolio. In case of significant changes in data, we send you exposure alerts. Additionally, we perform your Mark-to-Market (MtM) and Profit and Loss (PnL) calculations.

You now have your forecasted load curve, and you have purchased energy at the best possible price. The next step is to update your results, automatically if possible. You need to track the Mark-to-Market (MtM) of the volumes purchased to account for collateral requirements. Collateral consists of the guarantees that suppliers must deposit when buying/selling forward contracts to secure their transactions, and it generally evolves with price changes (Mark-to-Market).

Another element to monitor is the forecasted and realized PnL of the portfolio. The PnL is the difference between the price of energy purchased on the markets and the price at which energy is sold to customers. Suppliers may acquire customers but fail to properly structure the integration between customer acquisition, pricing, and hedging. It is often more detrimental for suppliers to experience strong, but poorly hedged, portfolio growth than to lose customers.

Augmented Energy supports you in managing the hedging of your portfolio. We offer a range of services to fully meet your needs.

Augmented Energy offers you a long-term forecast for your portfolio. Every day, we provide a forecast of the net consumption and production of your portfolio at a half-hourly interval from D+1 to Y+3.

Through the Noos platform, you will have access to a decision-support tool that allows you to break down the forecasted electricity volumes of your portfolio into tradable forward contract volumes. Additionally, there are two interfaces: one for viewing completed transactions and another for viewing historical spot and forward prices.

We closely monitor the evolution of your portfolio, and in case of significant data changes, we send you exposure alerts.

To ensure the best possible management of your hedging, the experts at Augmented Energy organize a monthly meeting with you to discuss the hedging strategy for your portfolio.

For more information or any additional questions, please contact us at: sales@augmented.energy

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