Risk-Sharing Contracts and risk management of bilateral contracting in electricity markets

Algarvio, Hugo

doi:10.1016/j.ijepes.2022.108579

Cited by 16 publications

(23 citation statements)

References 29 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…The work presented here refines and extends our previous work on electricity markets [ 7 , 10 ], portfolio optimization [ 12 , 13 ], risk management [ 3 , 14 , 16 ], and strategic bidding [ 15 ]. The experimental work was carried out with the help of the MATREM system [ 17 ].…”

Section: Introductionsupporting

confidence: 74%

“…Sellers and buyers of electricity negotiate bilateral contracts to hedge against spot prices volatility. Standard bilateral contracts can be physical or financial and include the following [ 3 , 5 ]: forwards, futures, options, and swaps (also known as contracts for differences). For non-standard contracts, several terms and conditions can be negotiated, such as energy price, energy quantity and duration (see, e.g., [ 2 ]).…”

Section: Bilateral Contracting Risk Management and Portfolio Optimiza...mentioning

confidence: 99%

“…In bilateral markets, players can sign standard financial and physical contracts to hedge against spot price volatility. In non-standard markets, players can negotiate privately and set the terms and conditions of bilateral contracts (see, e.g., [ 2 , 3 ]).…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Strategic Bidding of Retailers in Wholesale Markets: Continuous Intraday Markets and Hybrid Forecast Methods

Algarvio

Lopes

2023

Sensors

Self Cite

View full text Add to dashboard Cite

The deregulation process of the electricity sector has led to competition in wholesale and retail markets. In particular, retailers submit bids to wholesale markets to satisfy the energy needs associated with portfolios of end-use customers. This paper describes a strategic process for retailers bidding in a wholesale market composed of a day-ahead market, an intraday market, and a balancing market. It considers a market design that involves a hybrid model for the intraday market, based on daily auctions and a continuous procedure. The paper also presents a computational study to illustrate and test both the market design and the strategic bidding process of retailers. The results confirm the advantages of considering a continuous intraday market, show that bidding in short-term markets is more beneficial than bidding in medium-term markets, and indicate important aspects to consider when selecting customers to add to the portfolios of retailers.

show abstract

Section: Introductionsupporting

confidence: 74%

Section: Bilateral Contracting Risk Management and Portfolio Optimiza...mentioning

confidence: 99%

See 1 more Smart Citation

Strategic Bidding of Retailers in Wholesale Markets: Continuous Intraday Markets and Hybrid Forecast Methods

Algarvio

Lopes

2023

Sensors

Self Cite

View full text Add to dashboard Cite

show abstract

“…Moreover, it is relevant to mention the risks related to net load forecasts because of uncertainty concerning demand and variable renewable energy source (vRES) generation [11]. Risk hedging is essential to market participants, and financial instruments can be used when two parties with opposite positions are willing to exchange risk [12]. Derivative and bilateral markets provide financial instruments that participants can trade bilaterally.…”

Section: Introductionmentioning

confidence: 99%

“…They can respond to changes that occur in the environment in a timely fashion, exhibit goal-directed behavior, and interact with other agents to reach their design objectives. Against this background, this paper presents several key features of software agents able to negotiate support schemes, paying special attention to risk management, notably risk attitude, risk sharing, and price negotiation [12]. Furthermore, it presents a study where the Spanish government, as an agent, opens a public contest to negotiate risk-sharing contracts with vRES investors.…”

Section: Introductionmentioning

confidence: 99%

The Economic Sustainability of Variable Renewable Energy Considering the Negotiation of Different Support Schemes

Algarvio

2023

Sustainability

Self Cite

View full text Add to dashboard Cite

The increase in the prices of fossil fuels and environmental issues are leading to a high investment in wind power and solar photovoltaic all over Europe, reducing its dependence on imported fossil fuels. The European countries started incentive programs for investment in these renewable technologies, which consisted of fixed and market premium feed-in tariffs. These feed-in schemes involve long-term contracts with updated prices over inflation. These incentives highly increase the investment and installation of new renewable capacity in Europe. They lead to high renewable penetrations in power systems but originate a tariff deficit due to the difference between market prices and the tariffs paid to these technologies. End-use consumers pay the tariff deficit on retail tariffs. This work analyzes the market-based remuneration of variable renewable energy considering different support schemes and the role of risk-sharing contracts in mitigating the spot price volatility. It presents models able to negotiate bilateral contracts considering risk management, notably risk attitude and risk sharing, bid establishment, and clause (by-laws) negotiation. Furthermore, to evaluate the economic sustainability of renewable generation in Spain, it presents a study for different 12-year support schemes starting in 2010. The results confirmed that, in the case of using risk-sharing contracts during crisis periods, the incidence of low energy prices (price “cannibalization”) decreases, such as the tariff deficit. Furthermore, in the case of high-inflation periods, these contracts hedge against the increase in retail prices, resulting in an economic surplus for consumers.

show abstract

Mitigating long-term financial risk for large customers via a hybrid procurement strategy considering power purchase agreements

Yang,

Xu,

Gao

et al. 2024

Energy

View full text Add to dashboard Cite

Risk-Sharing Contracts and risk management of bilateral contracting in electricity markets

Cited by 16 publications

References 29 publications

Strategic Bidding of Retailers in Wholesale Markets: Continuous Intraday Markets and Hybrid Forecast Methods

Strategic Bidding of Retailers in Wholesale Markets: Continuous Intraday Markets and Hybrid Forecast Methods

The Economic Sustainability of Variable Renewable Energy Considering the Negotiation of Different Support Schemes

Mitigating long-term financial risk for large customers via a hybrid procurement strategy considering power purchase agreements

Contact Info

Product

Resources

About