How to handle market volatility on electricity market?
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To manage market volatility in the electricity market, various strategies can be employed. One approach involves utilizing long-term bilateral hedge contracts to reduce risk fluctuations in investments and market prices over time . Additionally, incorporating price-responsive demand mechanisms like thermostatically controlled loads can help mitigate congestion-related price spikes and stabilize prices in congested grid areas . Implementing advanced modeling techniques such as Gaussian Processes can aid in joint price-quantity risk management by providing efficient hedging strategies based on price-load correlations . Furthermore, forecasting electricity prices through time series analysis considering exogenous factors like gas, coal, and CO2 prices, as well as internal and external electricity flows, can help anticipate and manage price fluctuations in bidding zones effectively . By combining these methods, stakeholders can better navigate and mitigate the impacts of market volatility in the electricity sector.
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| Papers (5) | Insight |
|---|---|
| To handle market volatility in the electricity market, utilize SARIMAX models incorporating exogenous prices, internal and external electricity flows, and supplement with GARCH models for residual volatility forecasting. | |
Open access•Posted Content 17 Feb 2020 | To manage market volatility in electricity markets, a trade-off between social welfare and price stability is necessary, as reducing volatility without sacrificing welfare is impossible. |
| Mitigate electricity market volatility by employing uncertainty-diminution, hedge contracts, and risk management policies, as proposed in the research for restructured power systems. | |
Open access•Posted Content | A Machine Learning approach using coregionalized sparse Gaussian Processes effectively handles market volatility in electricity markets by improving hedging strategies based on price-quantity risk correlation. |
26 Oct 2020 3 Citations | Thermostatically controlled loads can mitigate electricity market volatility by providing load reduction, capping prices, and exploiting thermal inertia, as shown in the study. |
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