Forecasts designed specifically for weather hedges where settlement is based on forecast values rather than observed values
The need for SettleCast®
For a number of years Speedwell Weather has provided weather observations to the weather risk community for settlement of
conventional weather contracts. We have been doing this for over a decade and are the dominant provider of settlement data
in the OTC weather risk market.
We are now seeing demand for weather risk products where settlement is based on forecasted values of temperature rather than the observed
values. Energy prices are most commonly traded as futures, or forecasted prices for delivery, and not final delivery prices to
customers. Similarly, SettleCast is designed to match temperature forecasts to same time period as the Energy futures markets, such as Day-Ahead energy pricing.
What is SettleCast®?
- SettleCast is primarily derived from the 15 day ECMWF model output, but has been customized for use by energy companies.
- The daily forecast matches the appropriate Day convention for different energy markets. Typically in gas markets, a Gas Day is 6am to 6am local time.
In power markets, a Baseload Day is commonly 12am-12am or a Peak Day, which may be 7am-10pm.
- The forecast is based on the average spot temperature for each hour in the period. This is usually a better proxy for energy consumption than
the climate measurement using the TMin/TMax average.
- Frozen forecast model: we understand that consistency of modeling is critical. Speedwell freezes the parameters and method used
for downscaling until all weather transactions are closed.
- We provide historical verification data to measure the accuracy of the forecast.
What else is provided?
- Historic forecasts covering a minimum of 18 months and based on the exact method used in the current downscaling model are provided.
- We provide full verification statistics.
- We provide the actual T24 observations for the site.
- Feeds of SettleCast are available by FTP on a timely basis to hedgers and risk-takers.
- Smoothed climatologies also available
Why Use Speedwell SettleCast®?
- We have a pedigree in providing data for financial transactions. We understand these must meet the highest standards.
We have been acting in this capacity for over a decade.
- Speedwell is neutral. We are not affiliated to any other company involved in providing weather risk instruments.
- Unlike other forecast products which are subject to continuous development, SettleCast is developed specifically
for weather risk contracts. So counterparties can be confident that the historic forecast data used to price the
transaction will be consistent with the data used to settle it.
- Our product is consistent across international boundaries.
Where is SettleCast® available?
- We currently provide SettleCast based on the European gas day for over 80 European sites. These can be seen on
our inventory tool here
- We can generate SettleCast for additional cities on request.
- We can generate SettleCast to respect any required day-convention.
- We are also able to generate SettleCast forecast based on population weighted baskets as well as individual sites.