For a generator in a spot market, the upsides of scarcity pricing are revenue sufficiency and adequate
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For a generator in a spot market, the upsides of scarcity pricing are revenue sufficiency and adequate incentive for new investment. What can be the downside of scarcity pricing for a generator?
Question 1B [4 marks] Financial contracts enable retailers to hedge the spot price risk. A retailer often has a portfolio of various financial contracts based on the demand profile of its customer base. Discuss which financial contracts would a typical retailer opt for, and why? Illustrate your answer with a diagram depicting coverage of load profile through these contracts.
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Related Book For
Corporate Finance A Focused Approach
ISBN: 978-1439078082
4th Edition
Authors: Michael C. Ehrhardt , Eugene F. Brigham
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