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

Saptarshi Bhattacharya; Aparna Gupta; Koushik Kar; Abena Owusu

doi:10.1109/ICRERA.2015.7418597

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

Saptarshi Bhattacharya
, Aparna Gupta
, Koushik Kar
, Abena Owusu

Accounting and Finance

Research output: Chapter in Book/Report/Conference proceeding › Conference contribution › peer-review

9 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 language	English
Title of host publication	2015 International Conference on Renewable Energy Research and Applications, ICRERA 2015
Publisher	Institute of Electrical and Electronics Engineers Inc.
Pages	1190-1195
Number of pages	6
ISBN (Electronic)	9781479999828
DOIs	https://doi.org/10.1109/ICRERA.2015.7418597
State	Published - 2015
Event	4th International Conference on Renewable Energy Research and Applications, ICRERA 2015 - Palermo, Italy Duration: 22 Nov 2015 → 25 Nov 2015

Publication series

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

Conference

Conference	4th International Conference on Renewable Energy Research and Applications, ICRERA 2015
Country/Territory	Italy
City	Palermo
Period	22/11/15 → 25/11/15

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 7 Affordable and Clean Energy

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10.1109/ICRERA.2015.7418597

Cite this

Bhattacharya, S., Gupta, A., Kar, K., & Owusu, A. (2015). Hedging strategies for risk reduction through weather derivatives in renewable energy markets. In 2015 International Conference on Renewable Energy Research and Applications, ICRERA 2015 (pp. 1190-1195). Article 7418597 (2015 International Conference on Renewable Energy Research and Applications, ICRERA 2015). Institute of Electrical and Electronics Engineers Inc.. https://doi.org/10.1109/ICRERA.2015.7418597

Bhattacharya, Saptarshi ; Gupta, Aparna ; Kar, Koushik et al. / Hedging strategies for risk reduction through weather derivatives in renewable energy markets. 2015 International Conference on Renewable Energy Research and Applications, ICRERA 2015. Institute of Electrical and Electronics Engineers Inc., 2015. pp. 1190-1195 (2015 International Conference on Renewable Energy Research and Applications, ICRERA 2015).

@inproceedings{bf5eab4852ca45c383cacae70a6ad438,

title = "Hedging strategies for risk reduction through weather derivatives in renewable energy markets",

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.",

author = "Saptarshi Bhattacharya and Aparna Gupta and Koushik Kar and Abena Owusu",

note = "Publisher Copyright: {\textcopyright} 2015 IEEE.; 4th International Conference on Renewable Energy Research and Applications, ICRERA 2015 ; Conference date: 22-11-2015 Through 25-11-2015",

year = "2015",

doi = "10.1109/ICRERA.2015.7418597",

language = "English",

series = "2015 International Conference on Renewable Energy Research and Applications, ICRERA 2015",

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Bhattacharya, S, Gupta, A, Kar, K & Owusu, A 2015, Hedging strategies for risk reduction through weather derivatives in renewable energy markets. in 2015 International Conference on Renewable Energy Research and Applications, ICRERA 2015., 7418597, 2015 International Conference on Renewable Energy Research and Applications, ICRERA 2015, Institute of Electrical and Electronics Engineers Inc., pp. 1190-1195, 4th International Conference on Renewable Energy Research and Applications, ICRERA 2015, Palermo, Italy, 22/11/15. https://doi.org/10.1109/ICRERA.2015.7418597

Hedging strategies for risk reduction through weather derivatives in renewable energy markets. / Bhattacharya, Saptarshi; Gupta, Aparna; Kar, Koushik et al.
2015 International Conference on Renewable Energy Research and Applications, ICRERA 2015. Institute of Electrical and Electronics Engineers Inc., 2015. p. 1190-1195 7418597 (2015 International Conference on Renewable Energy Research and Applications, ICRERA 2015).

Research output: Chapter in Book/Report/Conference proceeding › Conference contribution › peer-review

TY - GEN

T1 - Hedging strategies for risk reduction through weather derivatives in renewable energy markets

AU - Bhattacharya, Saptarshi

AU - Gupta, Aparna

AU - Kar, Koushik

AU - Owusu, Abena

PY - 2015

Y1 - 2015

N2 - 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.

AB - 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.

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U2 - 10.1109/ICRERA.2015.7418597

DO - 10.1109/ICRERA.2015.7418597

M3 - Conference contribution

AN - SCOPUS:84964584652

T3 - 2015 International Conference on Renewable Energy Research and Applications, ICRERA 2015

SP - 1190

EP - 1195

BT - 2015 International Conference on Renewable Energy Research and Applications, ICRERA 2015

PB - Institute of Electrical and Electronics Engineers Inc.

T2 - 4th International Conference on Renewable Energy Research and Applications, ICRERA 2015

Y2 - 22 November 2015 through 25 November 2015

ER -

Bhattacharya S, Gupta A, Kar K, Owusu A. Hedging strategies for risk reduction through weather derivatives in renewable energy markets. In 2015 International Conference on Renewable Energy Research and Applications, ICRERA 2015. Institute of Electrical and Electronics Engineers Inc. 2015. p. 1190-1195. 7418597. (2015 International Conference on Renewable Energy Research and Applications, ICRERA 2015). doi: 10.1109/ICRERA.2015.7418597

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

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