Hedging strategies for risk reduction through weather derivatives in renewable energy markets

Saptarshi Bhattacharya, Aparna Gupta, Koushik Kar, Abena Owusu

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

4 Scopus citations

Abstract

Weather elements such as temperature and solar radiation play a crucial role in renewable power production as well as in power consumption. In this research, we address risk management issues of a power producer for its weather, price and production risk exposures. We investigate the extent of natural hedge embedded in the dependence of power production using renewable energy sources and power consumption on weather risk elements. We further develop a framework to construct explicit cross hedges for the risk management objectives of a renewable power producer using weather derivatives: a relatively new class of financial instruments for weather risk management.

Original languageEnglish
Title of host publication2015 International Conference on Renewable Energy Research and Applications, ICRERA 2015
PublisherInstitute of Electrical and Electronics Engineers Inc.
Pages1190-1195
Number of pages6
ISBN (Electronic)9781479999828
DOIs
StatePublished - 2015
Event4th International Conference on Renewable Energy Research and Applications, ICRERA 2015 - Palermo, Italy
Duration: 22 Nov 201525 Nov 2015

Publication series

Name2015 International Conference on Renewable Energy Research and Applications, ICRERA 2015

Conference

Conference4th International Conference on Renewable Energy Research and Applications, ICRERA 2015
CountryItaly
CityPalermo
Period22/11/1525/11/15

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