Get more margin and less risk

Keeping energy costs within a predictable range protects you from unexpected changes in the price of energy. Changes that could otherwise seriously impact your budget and profit margin.

Capped swaps

Fix your price below the market price in exchange for setting a upper protection limit with a Capped Swap. The Capped Swap is a combination of a bought swap and sold call option. It offers the swap buyer a lower swap level in exchange for limited upside protection.




Here's an example of how it works

To begin, you and Global agree upon:

  • the monthly volume
  • an official fuel price index
  • a hedging period (e.g. 3 months)
  • the (reduced) Fixed Price)
  • the Cap Price


Month 1

Monthly average settles at 115 (20 above the Fixed Price, but below Cap level). Global pays you in full, 20 x volume. 


Month 2

Monthly average settles at 90 (5 below the Fixed Price). You pay Global 5 x volume. 


Month 3

Monthly average settles at 130 (35 above the Fixed Price and 10 above the Cap). Global pays you up to Cap level; 25 x volume. 



Protection against increasing prices - from a below-market starting point - up to a level where you do not need the protection anymore. 

At the end of each calendar month, the settlement amount is based on the difference between the monthly average of the price index and the reduced Fixed Price, up to the point where the Cap level is exceeded. 


Three good reasons to use this strategy:

  • You do not need full upside protection
  • Attractive swap price
  • Flexibility in energy supply


Benefits Disadvantages
Tailor-made coverage Limited upside protection
Flexibility in physical supply Potential basis risk
Reduced swap price  


Morten Elgkjaer Larsen

Energy Risk Manager


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