ICE to launch European wind futures in weather derivatives expansion

Intercontinental Exchange, Inc. (ICE) a provider of financial market technology and data powering global capital markets, is launching 15 cash-settled wind futures contracts in December, which will expand its energy offerings into weather derivatives to cover wind generation across seven different European countries.

Set to launch on December 14th, 2026, subject to completion of relevant regulatory processes, the contracts are based on wind power output indices published by ENWEX GmbH (ENWEX), a provider of weather and renewable energy indices for temperature, wind and solar.

As mentioned, seven European countries will be covered by the new contracts, including Denmark, France, Germany, Italy, the Netherlands, Spain and the U.K.

ICE has confirmed that the new contracts will cover onshore wind (turbines on land), offshore wind (turbines at sea) and the two combined, depending on the country.

In addition, ICE also noted that the seven countries covered by the new contracts account for over 70% of Europe’s total installed wind generation capacity.

Combined with ICE’s European power futures, the contracts will also reportedly allow wind producers, utilities, suppliers and buyers under power purchase agreements to manage the volume risk of wind generation as well as the price risk of electricity.

It’s also important to add, that with these being weather derivative instruments, we can assume that these will involve either parametric or weather index trigger contracts.

Gordon Bennett, Managing Director, Utility Markets at ICE, commented: “Climatic variable futures are a natural addition to the energy markets we already offer. Wind volume is now a significant part of the power sector, and customers want a way to manage it alongside what they already trade with us. Our energy and environmental portfolio allow participants to hedge across commodities, hubs and time periods, and to manage the links between natural gas, power and carbon in one place.”

Bennett added: “Because the amount of wind generated affects how much gas-fired power is needed, wind futures give customers a way to manage exposures that run through all three, with the same trading and clearing relationships they already have with ICE.”

Robin Girmes, Managing Director at ENWEX, said: “As renewable generation grows, managing weather-driven volume risk is increasingly essential, particularly in the expanding market for renewable power purchase agreements.

“We believe transparent, standardized and independently calculated indices are fundamental to making renewable energy generation risks measurable, tradable and hedgeable. We are proud that ICE has chosen ENWEX indices as the foundation for these new wind contracts, a step towards establishing weather risk as an integral part of modern energy markets.”

Back in August we reported that the Chicago Mercantile Exchange (CME Group) is also expanding its range of weather risk transfer and hedging products, with a plan to launch Wind Power futures and options based on indices provided by Vaisala Xweather later this year.

Hedging weather variability enables volatility to be mitigated and earnings to be smoothed for the renewable energy industry, a key use of weather derivatives and weather futures or option contracts.

Being index-based risk transfer and hedging products, these are technically parametric in nature. In the past we’ve seen ILS investment managers allocating capital to weather derivatives markets, as a complementary asset to the more traditional natural catastrophe reinsurance contracts they typically invest in.