Risk Management in the Electricity Market

DOI

10.2991/978-94-6463-036-7_254How to use a DOI?

Keywords

Electricity market; Risk; management; Derivatives; Adaptability

Abstract

As electricity products have the properties of significant volatility, no easy storage, and high elasticity of demand, the spot prices can be highly volatile over a certain period. To reduce the possibility of such uncertainty, electricity products need better risk management. One effective method is using financial instruments. In this paper, we will mainly discuss risk management by using derivatives and the adaptability of futures and forwards in the electricity market. For most investors, they prefer to hedge with a portfolio of derivatives. We will also explain Modern Portfolio Theory (MPT) to help readers understand how to use mathematical models to trade off risk and return.

Copyright

© 2022 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Xuanhan Zhang
PY  - 2022
DA  - 2022/12/31
TI  - Risk Management in the Electricity Market
BT  - Proceedings of the 2022 2nd International Conference on Economic Development and Business Culture (ICEDBC 2022)
PB  - Atlantis Press
SP  - 1697
EP  - 1702
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-036-7_254
DO  - 10.2991/978-94-6463-036-7_254
ID  - Zhang2022
ER  -