Energy Link Products

Nodal Pricing of Electricity Wellington 20th Oct 2010

Sat, 11 Sep 2010 00:38:24 +1200

Objective: To provide a working knowledge of nodal dispatch and pricing as it applies to the New Zealand electricity spot market, including simple formulae to apply and the ability to recognise the cause of certain nodal pricing effects.

Prerequisites: EL0. Alternatively, some familiarity with the electricity spot market including an overview knowledge of the SPD and RMT models, and with the processes and timing of publication of final, and other prices.

Market Processes and Models for Dispatch and Pricing
Dispatch and pricing processes
Dispatch and pricing models – SPD and RMT
Dispatch cost function
Constraints in dispatch and pricing models
Shadow prices
Nodal energy prices and reserve prices defined
Losses and constraints surplus

One Node 'Markets'
Dispatch and pricing of energy
Reserves risk offsets
Dispatch and pricing of reserve
Dispatch and pricing effects for energy-reserve constrained dispatch
Dispatch and pricing dominated by reserves

Adding Lines and Losses
Pricing effects of losses in AC and DC lines
Linear versus quadratic losses
Contribution of losses to the losses and constraints surplus
Loss modelling in SPD

Congested Networks
Line limits
Pricing effects of simple line constraints
Contribution of constrained lines to the losses and constraints surplus
"Spring washer effect" due to line constraints in loops in the Grid

Note: Only simple arithmetic is used in this course. Simple examples using a few nodes at most are used to assist learning. Course material may also vary from the above on the day.

Introduction to the Electricity Market Wellington 19th Oct 2010

Sat, 11 Sep 2010 00:38:24 +1200

Objective: To provide an understanding of the essential elements of the NZ electricity supply system and wholesale electricity market.

Prerequisites: none

Introduction
Overview
Electricity power flows and concepts
Energy conversions and units

Industry Structure
Generation, retail, transmission, distribution, consumers
Historical perspective on industry structure
Governing legislation and regulations, the role of government

Supply
Types of generator and basic characteristics, fuels and renewable sources, generation by fuel type
Fuel use and efficiency of thermal generators
Heat rate and efficiency
Conversion from fuel to energy, efficiency curves, cost structures, GT, CCGT, steam turbines

Transmission: The Grid
AC lines and three phase transmission
The HVDC link
Losses and line limits

Demand
Total demand for electricity in New Zealand
Demand growth - history and projections
Demand profiles - shape and what creates the shape

The wholesale spot market
Role of the System operator
Offers & Bids
Market models
Reserves
Settlements

Electricity markets and their prices
Understanding historical price patterns and their origin

The Retail market
Pricing and reconciliation

The Hedge market
Understanding Hedge contracts

NB: Electricity market course material may vary from the above on the day

Hedging Electricity Wellington 21st Oct 2010

Sat, 11 Sep 2010 00:38:24 +1200

Objective: To provide a practical introduction to the hedge market (which includes the market for all larger consumers whether or not they have hedge or fixed-price variable volume contracts), and to techniques and methods for hedging price risk in electricity markets, with an emphasis on developing skills in working with and applying common forms of hedge contract.

Prerequisites: EL0, with ELNP1 also being useful background. Alternatively, familiarity with key elements of the electricity supply system including the Grid, metering and various types of generation. Some familiarity with the behaviour of prices from the spot market is also useful.

Introduction
Electricity supply contracts – ‘contracts for differences’, ‘fixed price variable volume’
Volatility in the electricity spot market
Sources of risk, correlations between risks
Attitudes to risk, risk premiums

Hedging Electricity
Derivatives as hedges
Physical and financial contracts
Contracts for differences
Options and swaptions
Location factor risk
Location factor hedging

The Hedge Market
The hedge market in New Zealand
Forward curves
The role of price forecasts
Hedge pricing and risk premiums

Buying and Selling Hedges
How supply and hedging arrangements are structured
The ISDA agreement
Fair value and hedge accounting

Hedging Strategy
Adjusting for location factors
Optimum generation with hedges in place
Timing of hedge transactions
Building a "hedge book"

NB: Course material may vary from the above on the day.