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Flexible Electricity Procurement Provides Alternative to Fixed Price Procurement

           US - Energy News

 
Chart 1
 

Both electricity and natural gas are subject to event risk where spot prices (and forward prices) spike (see Chart 1). This risk can be quantified to some extent, and this is where price data is very important. Since the advent of Locational Marginal Pricing (LMP) for RTOs, there is now a catalog of day-ahead and real-time price history. There is also a lot of forward price data that is disseminated by futures exchanges. Alfa Energy uses both load and price data to quantify and track each customer’s specfiic risk.

 
Table 1
 

 
Table 2
 

A review of Tables 1 and 2 show how we combine the load data and forward price data to quantify when there are good opportunities to lock in fixed prices as we also monitor the customer’s mark-tomarket risk. The data in the example is from a real customer, and the results are reflective of the movements in the forward curve for January 2018-June 2019 since December 2016 through November 2017. It can be observed that a customer would be better locking in most of the months now as opposed to last December, highlighting the concept of convergence we alluded to earlier. This analysis is reflective of a steady load customer, so we can use 24-hour flat prices. For customers with loads of more variation, we use a combination of peak and off-peak prices to track exposures.


Alfa Energy Group

Alfa Energy Group, an Edison Energy company, is an international energy, sustainability and technology consultant partner with 250 employees over 3 international locations. For over 25 years, Alfa has been servicing its clients’ needs through energy and water management, sustainability, and compliance consulting, and an intuitive ecosystem of user-driven energy, water, and carbon management software platforms. With coveted awards, an international industry-wide recognition, and clever simple solutions, today Alfa is partnering with clients to establish and deliver pivotal net zero strategies. Through smart energy management, the expertise and diligence of its people, transparent processes, and data management, Alfa continues to lead through its recognised gold standard of service delivery.