Publication Date:
2019
Description:
〈p〉Publication date: September 2019〈/p〉
〈p〉〈b〉Source:〈/b〉 Energy Policy, Volume 132〈/p〉
〈p〉Author(s): Raphaël-Homayoun Boroumand, Stéphane Goutte, Khaled Guesmi, Thomas Porcher〈/p〉
〈div xml:lang="en"〉
〈h5〉Abstract〈/h5〉
〈div〉〈p〉Our article provides a better understanding of risk management strategies for all energy market stakeholders. A good knowledge of optimal risk hedging strategies is not only important for energy companies but also for regulators and policy makers in a context of climate emergency. Indeed, the electricity sector is key to achieve energy and ecological transition. Electricity companies should be on frontline of climate change struggle. Taking the perspective of electricity retailers, we analyze a range of portfolios made of forward contracts and/or power plants for specific hourly clusters based on electricity market data from the integrated German-Austrian spot market. We prove that intra-day hedging with forward contracts is sub-optimal compared to financial options and physical assets. By demonstrating the contribution of intra-day hedging with options and physical assets, we highlight the specificities of electricity markets as hourly markets with strong volatility during peak hours. By simulating optimal hedging strategies, our article proposes a range of new portfolios for electricity retailers to manage their risks and reduce their sourcing costs. A lower hedging cost enables to allocate more resources to digitalization and energy efficiency services to take into account customers’ expectations for more climate-friendly retailers. This is a virtuous circle. Retailers provide high value-added energy efficiency services so that consumers consume less. The latter contributes to reach electricity reduction targets to fight climate warming.〈/p〉〈/div〉
〈/div〉
Print ISSN:
0301-4215
Electronic ISSN:
1873-6777
Topics:
Energy, Environment Protection, Nuclear Power Engineering
,
Political Science
