A renewable energy swap is a financial derivative that allows parties to exchange cash flows based on renewable energy prices or production levels. These instruments enable renewable energy producers, consumers, and investors to manage price risks and cash flow volatility associated with wind, solar, and other clean energy sources.

Renewable energy swaps help manage intermittency risks, price volatility, and regulatory changes affecting clean energy markets. These instruments support project financing and investment by providing predictable cash flows. Understanding renewable energy derivatives helps assess opportunities in the growing clean energy sector.

Real-world example: A solar farm enters a renewable energy swap to receive fixed $45 per MWh payments while paying floating electricity market prices, providing revenue certainty for project financing despite variable solar production and power price volatility.