The Evaluation And Management Of Electricity Price Risk

In recent years, the research of the electricity price risk is increasingly a hot issue of people, which can be interpreted by the following several reasons: firstly, compared with the traditional products, electrical power as goods has some specific characteristics: obvious seasonality, extremely high price, strong volatility, heavy-tailed distribution and so on. These make that there exist some limitations in spot transactions, which increases the electricity price risk. Secondly, the scientificity of the price of electrical power directly affects the use of power resources. Once financial risk happens in electric power market, it causes serious negative effects on society, economy and financial market. Compared to the social, economic, financial market risk has more serious negative impact. Electricity, as a power market operation indicator, often the change can be observed to get to know the basic form of market at present. The price for electricity is a indicator of electricity power market, through observing whose change the current market situation can be comprehended. Thirdly, the electric power industry in China is undergoing market-oriented reform. This kind of reform is confined to the power generation industry and effective power market has not yet been formed. With the joining of China into the WTO, the deepening of reform and the expanding of the opening up policy, the new electricity price formation mechanism brought a series of contradictions and problems.Based on the above reasons, all departments need to use proper methods and means to carry out price risk evaluation and effective control to reduce the losses of the enterprises. So, how to effectively identify, evaluate, control and avoid financial risks in power market is the main purpose of this paper. Because electric power markets, the formation mechanisms of the electricity price and influencing factors are different, different characteristics of the electricity market, different influence factors and different price characteristics should be considered when electrical prices risk in the electricity market is analyzed and assessed. In this paper, according to the formation and influence factors of price risk, we summarize the theories and methods of risk assessment, control, evasion and management in detail. Finally, taking xx company as an example, empirical analysis are carries on by applying the proposed VaR method. Based on this research, power suppliers can accurately predict the price of electricity to make bidding strategy; power supply enterprises can take the accurate electricity price information to determine the optimal purchase scheme of the power demand in the long-term bilateral contracts and the spot market, and investors can refer to the accurate forecasting information about the electricity price to make the right investment decisions.