Engineering
4 years ago

Optimized hedging reduces risk for Nordic hydropower producers.

RePEc: Research Papers in Economics
Evaluation of static hedging strategies for hydropower producers in the Nordic market
Stein‐Erik Fleten, Espen Bråthen, Sigurd-Erik Nissen-Meyer

Paper Summary

The article evaluates different hedging strategies for hydropower producers in the Nordic market. The researchers developed an optimization model to determine static hedge positions, focusing on simplicity over dynamic hedging. Results show that using forward contracts for hedging significantly reduces risk without majorly impacting revenue.

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