OIES – Risk Structure and Financial Hedging in Nodal Electricity Markets
Summary
This paper studies the evolving risk structure in U.
S. nodal electricity markets amid changing demand and supply dynamics, focusing on financial hedging instruments. It analyzes five main categories of grid risk and evaluates the effectiveness of Financial Transmission Rights (FTRs) in mitigating these risks. The study highlights how recent shifts in demand and supply introduce new risks that challenge existing financial instruments, exposing market participants and system operators to operational challenges and unhedged risks.
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