Forward contracts with bilateral options in electricity markets: Theory and analysis

T. S. Chung, S. H. Zhang, K. P. Wong, C. W. Yu, C. Y. Chung

Research output: Chapter in book / Conference proceedingConference article published in proceeding or bookAcademic researchpeer-review

Abstract

This paper presents an electricity forward contract with bilateral options, which enables both the seller and buyer to take advantage of flexibility in generation and consumption to obtain a monetary benefit while simultaneously removing the risk of market price fluctuations. Theoretical model for pricing this type of forward contract is developed and analyzed. Some distinguishing features are revealed. Numerical examples are used to demonstrate the validity of the proposed model.

Original languageEnglish
Title of host publicationIPEC 2003 - 6th International Power Engineering Conference
Pages701-706
Number of pages6
Publication statusPublished - Nov 2003
EventIPEC 2003 - 6th International Power Engineering Conference - , Singapore
Duration: 27 Nov 200329 Nov 2003

Publication series

NameIPEC 2003 - 6th International Power Engineering Conference

Conference

ConferenceIPEC 2003 - 6th International Power Engineering Conference
Country/TerritorySingapore
Period27/11/0329/11/03

Keywords

  • Electricity markets
  • Optional forward contracts
  • Pricing model
  • Risk management

ASJC Scopus subject areas

  • Energy Engineering and Power Technology
  • General Engineering
  • Computer Science Applications
  • Electrical and Electronic Engineering
  • Applied Mathematics

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