The problem is not price. It is what comes with it.
Most hedging structures are built on a simple assumption: that production can be translated into fixed volumes. For many renewable portfolios, that assumption no longer holds.
As wind and solar continue to scale, production becomes more variable and less aligned with standardised hedging structures. What was once a manageable mismatch is becoming more visible in both risk and realised performance. Asset owners need to consider not only the price they can secure, but also the volume and profile risk that comes with the hedge.
A gap between production and hedging
Traditional hedging approaches each serve a purpose.
Baseload structures offer simplicity and a fixed price but rely on a stable production profile. When output deviates from the fixed volume, the hedge can introduce volume risk.
Pay-as-produced structures align the hedge with actual production and remove volume risk. However, they typically come at a steep discount to the baseload price as both volume and profile risks are transferred to the offtaker.
For portfolios characterised by variability, this creates a structural gap. Asset owners may have to choose between taking on volume risk or accepting a discount for flexibility.
The right balance depends on how the assets produce, how the portfolio is structured and which risks the asset owner wants to retain.
A structure built around volume flexibility
VolFlex was developed as part of Norlys Energy Trading's FlexHedge framework to address this gap, in close dialogue with renewable asset owners.
The structure replaces fixed volume commitments with agreed volume bands. This lets the hedge follow actual production rather than a predetermined schedule.
Under VolFlex, the asset owner secures a fixed price level, while Norlys Energy Trading takes the volume risk within the agreed structure. This gives the asset owner price certainty without requiring the portfolio to meet a fixed volume commitment.
VolFlex can be applied at asset level, on a specific wind farm or solar park, or at portfolio level. At portfolio level, the hedge is linked to a broader production index, such as DK1 wind generation. This shifts the focus from the performance of an individual asset to production behaviour across the portfolio.
Settlement is based on indexed production over predefined periods. This reduces the need for continuous volume adjustments and simplifies the operational setup.
The appropriate structure and allocation of risk depend on the assets, production profile, market exposure and terms of the individual agreement.
From individual assets to portfolio-level hedging
Cloudberry Clean Energy, a Nordic IPP investing across wind, solar and BESS, has applied VolFlex to its Danish wind portfolio.
The agreement covers production from several wind farms in DK1. Production is hedged against the wind production index for the bidding zone, rather than against a separate fixed production schedule for each asset.
The structure provides Cloudberry with price certainty at portfolio level while reflecting the combined production behaviour of its wind assets.
The agreement shows how an index-based hedge can be applied across a portfolio when individual assets do not fit a fixed-volume structure.
Looking beyond price certainty
Within the FlexHedge framework, VolFlex sits between traditional baseload hedges and pay-as-produced structures.
It combines price certainty with a more flexible volume setup that accounts for uncertainty in how the underlying assets perform. The structure can be applied to a single asset or across a portfolio.
For asset owners, comparing hedging structures is therefore about more than the price offered. It also requires a clear view of where volume risk and profile risk sit, and how the structure fits the portfolio's actual production.
That perspective makes it possible to assess the commercial value of a hedge more accurately.
A complement to established hedging structures
Standard hedging products remain relevant and continue to serve a wide range of asset-specific use cases. VolFlex complements these structures with a portfolio-based approach for assets that benefit from greater volume flexibility.
As renewable portfolios grow in scale and complexity, the interaction between price, volume and profile risk becomes more important. A fixed-volume hedge will remain appropriate for some portfolios. For others, a structure linked more closely to portfolio production may provide a better fit.
The price is visible at the point of agreement. The risks that come with it become visible over time. A well-structured hedge accounts for both.
Curious whether this structure fits your portfolio?
Reach out to
Flemming Sørensen
Head of Route-to-Market Origination
fls@norlysenergytrading.com