This group brings together the best thinkers on energy and climate. Join us for smart, insightful posts and conversations about where the energy industry is and where it is going.

Post

Free power market: how to close prices & volumes?

Your access to Member Features is limited.

Please or apply for membership to continue reading this post.

Free power market: how to close prices & volumes?

A subject that deserves careful analysis is contracted prices and volumes.

The standard is closing a fixed price (adjusted by an inflation index) and a fixed volume consistent with the expected business plan.

But in real life the volume consumed in each given month is never the contracted one on the dot! There is a surplus or a "left over". In these two cases the risk involved is having to sell at a loss or buy at a much higher price than the contracted one.

There are ways to mitigate these risks. Contracting (a) a range of volumes and not a fixed amount, and (b) a "collar" price to enable transactions on the "spot" but with "palatable" limits.

I call the attention of this matter because in Texas (USA) the spot skyrocketed (price of the order of dozens of times the normal one) due to a blackout of great proportions.

 If you want to explore these risk mitigation possibilities, get in touch!

Rafael Herzberg's picture
Thank Rafael for the Post!
Energy Central contributors share their experience and insights for the benefit of other Members (like you). Please show them your appreciation by leaving a comment, 'liking' this post, or following this Member.
More posts from this member

Discussions

Spell checking: Press the CTRL or COMMAND key then click on the underlined misspelled word.

No discussions yet. Start a discussion below.

Get Published - Build a Following

The Energy Central Power Industry Network is based on one core idea - power industry professionals helping each other and advancing the industry by sharing and learning from each other.

If you have an experience or insight to share or have learned something from a conference or seminar, your peers and colleagues on Energy Central want to hear about it. It's also easy to share a link to an article you've liked or an industry resource that you think would be helpful.

                 Learn more about posting on Energy Central »