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To finance this, a bank will want to see they've managed to hedge their business and are in the business of capturing those spreads rather than speculating on t

To finance this, a bank will want to see they've managed to hedge their business and are in the business of capturing those spreads rather than speculating on the widening of that spread (only to have it contract). Interestingly, this may be exceedingly hard to do on the open market and may require setting up an expensive structured product with the trading group of some bank, where they pay you a fixed price each day and take on the daily/monthly (and particularly in power markets, term) risk. That won't be cheap, especially if these aren't located to one of the major grid nodes where there are liquid markets available. Basically, I'm just wondering how hedging costs affect your numbers.

dragontamer 10y ago
> To finance this, a bank will want to see they've managed to hedge their business and are in the business of capturing those spreads rather than speculating on the widening of that spread (only to have it contract) The spread is grossly positive. Pumped-Hydro provides a location for baseline power plants (nuclear, coal, and even Wind / Solar) to continue to pump energy into the grid without getting shut down. Coal, Wind, and Nuclear plants, in particular, are typically very difficult to start back up again. So it is profitable for these plants to continue to generate power, even when the plants pay money for the privilege for someone to "waste" it somewhere. Then of course, later in the day, the "batteries" (ARES, Pumped Hydro, CAES, and what-not) sell the energy back to the grid when peak-energy occurs (usually around 5:00, when businesses still have the factories running but people have also begun to return home and turned on their air conditioning again).