Weather Traders Are Hedging Against the Next German Wind Drought

After a prolonged wind drought earlier this year that cut earnings at utilities, weather traders are ramping up bets to protect themselves against the next bout of calm conditions in Germany.

Wary of increasingly volatile wind levels in Europe’s biggest power market, utilities, trading houses, and banks have hedged against lower output several months earlier than normal for the winter, said Tim Boyce, head of EMEA weather derivatives at TP ICAP Group Plc in London. Inquiries for the two quarters from October are up by as much as 20% from a year ago, the broker said.