Volatility Is the Asset, Not the Battery - Miranda Energy

Volatility Is the Asset, Not the Battery - Miranda Energy

by Chris Kennedy & Ed Porter · View the channel on PSI

Humanities, Social Sciences & Thought Economics & Finance KNBEnergy industries and utilitiesKNBLElectrical power generation and distribution industries
🎙 Chris Kennedy & Ed Porter 👥 28K 📅 October 6, 2026 ⏱ 39 min 👁 6K 📄 expert opinion 🧭 2026-10-15
Available in: English (current) Français

Keywords

basis riskTB swapfixed-for-floatingduck curveISDA

Summary

In this episode of Transmission, host Ed Porter interviews Chris Kennedy, founder of Miranda Energy, about the emerging market for battery revenue swaps. The discussion starts with basis risk—the mismatch between actual battery revenues and the fixed-for-floating swap payout—and how it can be mitigated using round-trip efficiency adjustments, degradation schedules, payout caps, and availability provisions. Kennedy explains the evolution from straightforward day-ahead top-bottom (TB) swaps to total revenue swaps benchmarked against indices like Modo Energy’s, which capture more of the revenue stack and further reduce basis risk. He then draws parallels with the interest-rate swap market, where ISDA documentation provides standardisation. A concrete use case is a German solar portfolio that used a TB swap to hedge against the duck curve without building a physical battery. Kennedy argues that volatility itself is the investable asset, and Miranda Energy’s strategy is to monetise volatility through long-term (up to ten-year) swaps, offering credit-light offtakes to BESS SPVs. He contrasts his nimble, prop-shop approach with that of large trading houses, and suggests that the market overweights backwardation in the forward curve. The conversation also touches on future developments like options and Volga trading, and emerging markets in Poland, Hungary, and Spain.

198 words

Critical Evaluation

Value of the Information & Strength of the Argument

The video provides high value by demystifying a nascent financial product: battery revenue swaps. It explains complex concepts such as basis risk, round-trip efficiency adjustments, and the ISDA legal framework in a clear, accessible way. The argumentation is solid, relying on concrete examples (German solar hedge, Polish ten-year deal) and contrast with traditional trading houses. The guest’s dual experience in interest-rate derivatives and renewable assets lends credibility. The reasoning about why volatility is an asset is logically articulated, though it reflects a subjective investment thesis rather than empirical proof. Overall, the information is itself valuable and well argued, even if some claims are forward-looking and speculative.

Scientific Rigor, Source Quality, Title Accuracy

The scientific rigor is moderate: the video is an expert interview, not a peer-reviewed report. No external data sources are cited beyond references to the Modo Energy index and EEX futures, and the guest’s own deals. The discussion does not provide quantitative evidence or statistical validation of the claims. However, the technical accuracy regarding swap mechanics and market structures is plausible and aligns with established finance concepts. The title is faithful to the content, not sensationalised. The description links to the Modo Energy website for indices, but no direct academic references are given. The podcast format implies an informal yet knowledgeable tone, which is appropriate for the intended audience.

230 words

Title / Content Match

The title accurately captures the central thesis: the asset to own is volatility, not the depreciating battery hardware.

Quality & Reliability

8/10

The discussion features an industry expert with practical experience in energy derivatives and provides detailed, plausible explanations of financial structures. However, the content is entirely interview-based without formal citations, and some claims (e.g., about market developments) are anecdotal, limiting the score to 8.

Chapters

Cited Sources

  • Modo Energy — Referenced as a source for battery revenue indices and the AI analyst Ko, used in the discussion of total revenue swaps.

Contribution & Novelties

The video contributes an insider’s perspective on the practical application of battery revenue swaps, a topic rarely explained in detail publicly. It highlights innovations such as availability-adjusted payout caps and credit-light offtakes for SPVs, and proposes that volatility itself is an investable asset. The comparison to interest-rate swaps provides a fresh analogy and framing.

Pour aller plus loin :

  • Basis risk — Fundamental concept in hedging and derivatives.
  • Duck curve — Phenomenon of oversupply at midday, motivating battery value in solar-heavy grids.
  • ISDA — Standardised documentation for OTC derivatives, used in fixed-for-floating swaps.

93 words

Radar Profile

The profile shows very high scores in technical and quantitative dimensions, reflecting the deep detail on swap mechanics and market structure. Qualitative information is solid but less extensive, while global reliability is moderate due to the lack of cited sources. This suggests a highly specialised, practice-oriented discussion.

Reliability 8/10