Nephila Capital, the largest asset manager providing investments in natural catastrophe and weather risk, has provided the risk transfer capacity for a wind variability hedge for a project aiming to be New York State’s first community owned wind farm.
Nephila is the largest investment manager in the insurance-linked securities (ILS) and reinsurance-linked investment space and has a reputation for innovation in weather risk management. With a track record of providing tailored weather hedging product capacity for large projects, this latest deal shows the ILS managers’ ability to leverage its capacity to help protect financial performance from weather variability, as well as providing catastrophe risk reinsurance capacity.
Black Oak Wind Farm LLC aims to be a community owned wind farm serving part of New York State. Black Oak is currently raising financing, targeting New York residents and companies with an equity round to ensure the community ownership angle of the project.
Black Oak has already sought to protect itself from the financial risks posed by weather variability and will use a wind hedge to smooth earnings volatility. Nephila Capital has provided a weather risk management product which allows Black Oak to transfer the risk of lower than expected wind volumes or wind performance, thus providing improved revenue certainty to the project over the duration of the wind hedge.
Nephila Capital has provided the risk transfer capacity necessary for the hedge and has worked alongside REsurety to structure the wind hedge, a firm that provides proprietary technology and analytics for wind volume hedging, such as to help define settlement terms, index options and tools to help minimise basis risk.
Nephila Capital has a track-record of working on tailored weather hedging products, such as the $450 million weather and oil price insurance transaction for a Uruguayan state-owned hydro-electric power company which it worked on alongside the World Bank.