Uniper buys German hydropower to hedge against future price increases

The German utility Uniper said that it has sold large quantities of future hydropower production as part of an hedging strategy.

Uniper sold 75% (134.86 euros) of its German hydropower production for 2025 and 30% (2026) at an 88 euro/MWh average, according to a presentation made for a conference call with analysts on the earnings of the first three months of 2024.

LSEG data revealed that the wholesale benchmark price of round-the clock German power for all generation sources for 2025 was 87.0 euros, while it was 82.2 euros in 2026.

Fuel elements at wholesale are priced differently, resulting in discrepancies.

These levels reflect the use of fossil-generated energy and renewable resources, which are affected by national support schemes as well as unpredictable weather patterns.

Hedging is used by producers to minimize the impact of volatility in prices and to lock-in forward production costs that are deemed favorable at a particular point in time.

Wholesale market rates are used to monitor price trends and evaluate a utility’s physical assets.

Uniper said that it has sold 95% (51 euros) of its German production for 2024 after selling its output in 2023 at an average of 34 euros.

Other coal, gas and nuclear power plants are also operated by the company in Europe. It also has wind and solar energy generation units which were not included.

Uniper stated that it sold nuclear and hydropower at an average price of 38 euros per unit for the Nordic region in 2025, while 35% of its output was sold for 2026. In 2024, Uniper achieved 45 euros, which represented 85% of their output.

Vattenfall, a sector peer, said that it hedged last week 52% of the Nordic generation for 2025 at an average rate of 48 euros/MWh. ($1 = 0.99195 euros) (Reporting and editing by Miranda Murray, RashmiAich, and Vera Eckert)

(source: Reuters)