Using electricity options to hedge against financial risks of power producers

Salvador Pineda Morente, Antonio J. Conejo

    Research output: Contribution to journalJournal articleResearchpeer-review

    388 Downloads (Pure)


    As a consequence of competition in electricity markets, a wide variety of financial derivatives have emerged to allow market agents to hedge against risks. Electricity options and forward contracts constitute adequate instruments to manage the financial risks pertaining to price volatility or unexpected unit failures faced by power producers. A multi-stage stochastic model is described in this tutorial paper to determine the optimal forward and option contracting decisions for a risk-averse power producer. The key features of electricity options to reduce both price and availability risks are illustrated by using two examples.
    Original languageEnglish
    JournalJournal of Modern Power Systems and Clean Energy
    Issue number2
    Pages (from-to)101-109
    Publication statusPublished - 2013


    • Price risk
    • Availability risk
    • Stochastic programming
    • Forward contracts
    • Electricity options


    Dive into the research topics of 'Using electricity options to hedge against financial risks of power producers'. Together they form a unique fingerprint.

    Cite this