A review of price risk management in PJM and nord pool electricity market

Abstract

Market participants and system operators are faced with price risks caused by various factors, such as congestions or market power abuse. Therefore, the price risk management in deregulated market environment is of great importance. In this paper, various risk-hedge financial instruments in PJM and Nord Pool, such as FTRs, futures, forwards and CFDs are investigated. These risk management mechanisms can be further utilized for congestion revenue allocation, speculation or arbitrage under different market circumstances.