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.

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

1. Introduction
   What is a hedge?
   Volatility in the electricity spot market
   Sources of risk
   Attitudes to risk, risk premiums
2. Hedging Electricity
   Financial Markets Conduct Act
   Contracts for differences
   Swaps and options
   Futures and swaptions
   The spot market’s ‘losses and constraints excess'
   Financial transmission rights (FTRs)
3. Hedging Strategy
   Location factor adjustments
   Optimum generation with hedges in place
   Using FTRs
   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 are GST exclusive - Download Course PDF

Please note, if you are located outside of New Zealand and wish to book a course, please send us an email.