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I consider a long term PPA a hedge against near term volatility. C.f. https://www.fia.org/marketvoice/articles/derivatives-markets-help-hedge-risk-long-term-ren
by asciimike 4y ago
I consider a long term PPA a hedge against near term volatility. C.f. https://www.fia.org/marketvoice/articles/derivatives-markets-help-hedge-risk-long-term-renewable-power-agreements https://www.fia.org/marketvoice/articles/derivatives-markets...
- rahimnathwani 4y agoI read the article but don't see how it addresses my point. In any case, let's assume OVH had engaged in a hedge transaction betting that energy prices would go up. That would have positive value for them. But the hedge would be settled financially. It would not limit OVH's marginal cost of electricity. And your marginal cost is what matters when you're setting prices.