Transmission Trading the weather: Inside energy’s new derivatives market with Theresa Kammel & Pierre Buisson (Munich Re)
Dec 18, 2025
Theresa Kammel, a Weather Derivative Originator at Munich Re, and Pierre Buisson, a Senior Structurer, dive into the dynamic world of weather derivatives. They reveal how energy markets hedge against unpredictable weather, like a single wind drought costing Germany €1.6 billion. The duo explains bespoke weather-linked products that help traders manage risks and outlines the necessity for battery owners to hedge against low-volatility conditions. They further discuss the emerging need for long-term weather hedges as climate change adds a layer of uncertainty.
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Wind Became A Major Risk
- Wind risk has grown to rival temperature-based products as renewables scale.
- A European wind drought in Q1 2025 inflicted roughly €1.6bn of system cost in Germany alone.
Design For Regular, Diversified Payouts
- Structure products to pay out regularly rather than only on 1-in-100 events.
- Use diversifying counterparties like reinsurers to hold aggregated weather risk across geographies.
Batteries Lose From Boring Weather
- Batteries' day-ahead revenues depend on intra-day renewable volatility, not extreme weather.
- 'Boring' low-volatility weather can quietly erode battery cycle opportunities and revenues.