Trading the weather: Inside energy’s new derivatives market with Theresa Kammel & Pierre Buisson (Munich Re)

Dec 18, 2025

Join Theresa Kammel, a weather derivative originator at Munich Re, and Pierre Buisson, a senior structurer, as they dive into the fascinating world of weather derivatives. They explore how energy companies hedge against unpredictable weather events, like a €1.6 billion loss from a wind drought in Germany. Discover the intricate 'Lego bricks' of customized financial products that protect traders and utilities. Learn why weather insurance is becoming essential for financiers and how renewables are reshaping the risk landscape for energy supply.

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INSIGHT

Weather Is Now A Financial Input

Weather now drives both supply and demand in power systems, making it a core financial input rather than mere context.
Hedging weather risk reduces revenue volatility and lowers financing costs, enabling more projects to be built.

ADVICE

Match Index To Your Exposure

Find a weather index that matches your exposure and quantify how temperature deviations translate to your costs.
Agree pricing with a counterparty, observe the season, then settle the payout based on that index.

INSIGHT

Options And Swaps Are The Bricks

Weather derivatives are built like financial Lego: options and swaps are the common building blocks.
Options pay a premium for asymmetry while swaps exchange exposures with no upfront premium.

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The global energy sector is increasingly exposed to unpredicatble weather. Wind droughts and extreme temperatures can create massive financial instability. How do renewables that rely on an ever increasingly hard to predict energy source - manage the risk that the sun might not shine, and the wind might not blow?

This episode demystifies the multi-billion-pound market of weather derivatives, exploring how energy utilities, renewable asset owners, and battery optimisers use these customised structured products - using signals like Heating Degree Days, wind speeds, or precipitation to effectively transfer operational risk

Key topics covered:

- How thus multi-billion-pound market operates almost entirely out of sight.

- How a single wind drought drained €1.6 billion from Germany’s energy system - highlighting why hedging renewable-generation risk has become mission-critical.

- The financial “Lego bricks” that allow traders to build bespoke weather protection.

- Why battery owners must hedge against boring weather and how low-volatility conditions could quietly erode their revenues.

- Why financiers are insisting on weather insurance before funding new renewable assets.

About our guests

Theresa Kammel - Weather Derivative Originator and Pierre Buisson - Senior Structurer, Weather and Energy work at Munich Re, one of the world’s leading providers of reinsurance, primary insurance and insurance-related risk solutions. Munich Re is also playing a key role in driving forward the digital transformation of the insurance industry. For more information, head to their website. https://www.munichre.com/en.html

About Modo Energy

Modo Energy helps the owners, operators, builders, and financiers of battery energy storage understand the market - and make the most out of their assets.

All episodes of Transmission are available to watch or listen to on the Modo Energy site. To stay up to date with our analysis, research, data visualisations, live events, and conversations, follow us on LinkedIn. Explore The Energy Academy, our bite-sized video series explaining how power markets work.