- electricity
- blackout
- curtailment
- concerns that demand will far exceed supply
- physically delivered contract has been pushed to an unusual premium to the financially settled derivative
- qué será será
Amazing how many contracts exist:
A physical contract for electricity is a negotiated contract between a seller and a buyer in the over-the-counter (OTC) market. There is a range of different physical contracts for 15-minute delivery, hourly, spot, long-term or forward. Since electricity cannot be stored, this range of contracts is necessary to maintain supply-demand balance.
Derivative contracts are used in European power exchanges. The value of a derivative will vary based on the changes in the price of the underlying power product. Companies that consume and produce energy use energy derivatives to help hedge against marketplace risks.Background:
Supply concerns have been stoked by extended nuclear maintenance scheduled for the fourth quarter. In mid-April, France’s EdF reduced its 2020 nuclear output guidance to 300TWh to reflect the Covid-19 crisis and resulting drop in power demand. It then changed its nuclear maintenance schedule in late April — this shows that 19.4GW is expected to be off line in October-December.
But historical data show that during winter 2016-17, when nuclear unavailability averaged over 20GW, day-ahead hourly prices peaked at €874/MWh for delivery on hour 19 on 7 November 2016.Can't they just spin the wind turbines faster?
At today's exchange rate, this works out to $980.72/MWh. Ouch.
Meanwhile in New England this morning: 90% of electricity provided by natural gas and nuclear; only seven percent by renewables. Cheap energy right now.
Electricity prices for households, December, 2019, around the world, kWh, US dollar, partial list follows:
- Sudan: $0.00
- Venezuela: $0.00
- Iran: $0.01
- Cuba: $0.01
- Saudi Arabia: $0.05
- Mexico: $0.07
- China: $0.08
- Taiwan: $0.10
- Norway: $0.12
- USA: $0.14
- Sweden: $0.18
- France: $0.20
- Italy: $0.26
- Germany: $0.36
- Bermuda: $0.39
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