Course 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.

Recommended Prerequisites:

• Introduction to the Electricity Market (EL0)
• Nodal Pricing of Electricity (ELNP1) is also 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.

Pre-Course Preparation:

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

Course Content

Introduction
- What is a hedge?
- Volatility in the electricity spot market
- Sources of risk
- Attitudes to risk, risk premiums

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)

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

The Hedge Market
- The hedge market in New Zealand
- Hedge market liquidity

Miscellaneous
- The ISDA agreement
- Front, middle and back offices
- Fair value and hedge accounting

Course Notes:

• Course material may vary from the above on the day.
• Prices are GST exclusive - Download 2025 Course PDF | Download 2026 Course PDF

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