Objective: To provide a practical introduction to the hedge markets, and 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.

The course includes a number of rounds of our hedging game which challenges participants to develop and manage a hedging strategy for a large consumer or a generator.

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.

The course includes a number of rounds of our hedging game which requires the players to make hedging decisions and observe the outcomes.  It’s a challenge and a lot of fun!

 

Video:  Prior to the course, participants should watch this short video on "hedging concepts". 

 

  1. Introduction
    What is a hedge?
    Common supply arrangements – ‘contracts for differences’, ‘fixed price variable volume’
    Volatility in the electricity spot market
    Attitudes to risk, risk premiums
  2. Hedging Electricity
    Securities Markets Act
    Contracts for differences
    Swaps and options
    Futures and swaptions
    Financial transmission rights (FTRs)
    The spot market’s ‘losses and constraints surplus’
  3. Hedging Strategy
    Location factor adjustments
    Optimum generation with hedges in place
    Using FTRs
    Timing of hedge transactions
    Building a “hedge book”
    The forward curve
    The role of forecasts
    Pricing and valuing futures, swaps and options
    Modelling hedge strategies
    Stress testing
  4. The Hedge Market
    The hedge market in New Zealand
    Hedge market liquidity
  5. Miscellaneous
    The ISDA agreement
    Front, middle and back offices
    Fair value and hedge accounting

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

Prices shown below are GST exclusive

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Hedging Electricity Course Schedule

Date Location Price Early Payment Date Seats
19 Oct 2017
Wellington$1,095.00 $985.50 Earlybird!17 Oct 2017