Structuring Contract-for-Difference Instruments for Hedging Electricity Price Risks on a Blockchain-based Marketplace

The volatile nature of day-ahead electricity markets means that participants often resort to some form of derivative hedging instrument. One such derivative instrument is a Contract-for-Difference (CfD), specifically available to renewable generators in some jurisdictions to enable them to hedge against their price risk. CfD is a bilateral arrangement between a generator selling into, and an offtaker buying out of, a centrally cleared pool market for electricity. In this arrangement, the generator subsidizes the offtaker when the spot price is high; whereas, the offtaker subsidizes the generator when the spot price is low. This establishes a synthetic bilateral electricity transaction, operating in parallel to the pool market. Embracing CfD to hedge against price risk presents new risks such as counterparty credit, margining, third-party, and legal risks. They also incur high costs and possess underlying process risks. Decentralized Finance - an overarching term representing financial services built on top of a public blockchain - seems to present particularly compelling opportunities in electricity derivatives for these reasons. Therefore, we propose a novel Decentralized Finance instrument: a blockchain-based marketplace governed by a smart contract to act as a mediator between stakeholders mutually enrolled in bilateral CfD arrangements. The employed smart contract structure autonomously and irrefutably enforces the terms of the CfD, underpinned by a novel collateralization and settlement mechanism. This novel approach mitigates the hedging-related and underlying process risks of traditional CfD instruments.

Structuring Contract-for-Difference Instruments for Hedging Electricity Price Risks on a Blockchain-based Marketplace

The volatile nature of day-ahead electricity markets means that participants often resort to some form of derivative hedging instrument. One such derivative instrument is a Contract-for-Difference (CfD), specifically available to renewable generators in some jurisdictions to enable them to hedge against their price risk. CfD is a bilateral arrangement between a generator selling into, and an offtaker buying out of, a centrally cleared pool market for electricity. In this arrangement, the generator subsidizes the offtaker when the spot price is high; whereas, the offtaker subsidizes the generator when the spot price is low. This establishes a synthetic bilateral electricity transaction, operating in parallel to the pool market. Embracing CfD to hedge against price risk presents new risks such as counterparty credit, margining, third-party, and legal risks. They also incur high costs and possess underlying process risks. Decentralized Finance - an overarching term representing financial services built on top of a public blockchain - seems to present particularly compelling opportunities in electricity derivatives for these reasons. Therefore, we propose a novel Decentralized Finance instrument: a blockchain-based marketplace governed by a smart contract to act as a mediator between stakeholders mutually enrolled in bilateral CfD arrangements. The employed smart contract structure autonomously and irrefutably enforces the terms of the CfD, underpinned by a novel collateralization and settlement mechanism. This novel approach mitigates the hedging-related and underlying process risks of traditional CfD instruments.

Analysis of PV Self-Consumption in Educational and Office Buildings in Spain

As grid parity is reached in many countries, photovoltaic self-consumption is raising great interest. Currently, there is a big number of new projects being developed in Spain thanks to the new regulation. From the experience of the monitoring of one full year of operation of a self-consumption PV plant in a university building, a regulatory, energy, and economic analysis is made for this type of building. It has been carried out by simulating the behavior of the building with installations within the range of PV powers allowed in the Spanish regulation. The analysis shows the good fitting between the new Royal Decree of Self-Consumption and the new Building Code. The economic analysis proves that the new simplified compensation method gives the best economic return for this use of the buildings when the PV production is matched with the consumption. The time of return of investment is between 8 and 9 years, and the levelized cost of electricity (LCOE) is into the range of the pool market price of electricity. These results show the profitability of PV self-consumption for this type of building.

Different ANN Models for Short Term Electricity Price Forecasting

In a deregulated electiricity market, price forecasting is gaining demand with application of Artificial Neural Network (ANN). The paper deals with price forecasting with different ANN models.like Back Propagation Neural Network( BPNN), Radial Bias Function Neural Network (RBFNN) and Genectic Algorithm based Neural Network (GANN). A contextual investigation is made with the downloaded data of the day-ahead pool market prices of the California Pool Market using the above four different ANN models and the results are compared.

Differences in conventional and seniors-oriented apartment management

PurposeFrom the consumer side, this paper aims to highlight some of the various characteristics that older renters seek out from their apartment buildings, relative to conventional multifamily residential buildings and, from the operational side, to examine some of the costs involved in daily operation of such buildings.Design/methodology/approachThe Rental Housing Finance Survey provides data that enables scholars to test empirical differences in amenities and costs between senior-oriented communities and other apartment buildings.FindingsOccupancy rates outpace the rate for all other apartment communities. Regarding amenities, senior apartment communities are more likely than other communities to have a fitness center on premises, but less likely to have a swimming pool. Market value for senior properties is usually less than properties marketed toward multi-family property tenants. This difference may be due to a higher pattern of both operating/capital expenses within senior communities. Part of these increases in operating costs is due to a higher propensity to hire professional management companies and a higher fee for managing senior apartment communities.Originality/valueLiterature on seniors living within apartment communities is somewhat sparse, particularly regarding the operational aspects of managing apartment communities. There is a dearth of information on industry success measurements known as operating and capital expenditures. This study triangulates multiple sources of data to investigate differences in cost of senior housing apartment communities, as well as amenity structures.

Is Exchange Regulation Effective for Junior Public Equity Markets?

In this chapter the authors examine the effectiveness of an exchange-regulated junior public equity market in the development of early-stage firms. They focus specifically on a regulated blind-pool market in Canada known as the Capital Pool Company program and show that the exchange-regulated program has increased the number of junior public firms in Canada, with over 10% graduating to a more senior stock exchange within three years on average. They also show that the firms experience strong secondary market performance pre-graduation, but that the post-graduation performance is worse than the market index in the three- and five-year periods after the graduation.