The client: a major European railway company.

Background: railway companies use millions of MWh of electricity per year, equivalent to the power needs of a large city.With increasingly volatile energy prices, the ability to fix prices over the medium term allows railway companies to plan, budget and guarantee their prices more effectively.

The challenge: Essent Trading’s challenge was to create a product that locks in electricity input prices for the client over the long term.

Our solution: Essent Trading created a virtual link between existing power generators and the client’s anticipated power requirements, providing the client with the option of flexible offtake at a predictable price. This arrangement incorporated a long term fixed capacity fee, coupled with a rolling lock-in strategy for their fuel needs.

The result: the deal covers a period of eight years, a unique achievement in the railway market. For the client, the contract provides long-term price stability. Essent Trading uses the structure of the deal to guarantee long-term offtake from its counterparties.