In chapter 16, you do not mention the volatility of revenue, which is dependent on the price of eelctricity. Isn the volatility important?
The analysis we presented is about acquiring a physical asset to produce steam. Because the physical asset came in tree types, we focused on those. However, expanding the set of alternatives would be the right thing to do, particularly to include producing steam from electric powered boilers or possibly buying steam from the electric company. The importance of these alternate investments depends on the relative levels and volatility of gas, oil, and electricity prices.
Related Questions
- Will the Congestion Revenue Rights (CRRs) be settled at the Day Ahead Settlement Point Price (SPP) or the Day Ahead Locational Marginal Pricing (LMP)?
- In chapter 16, you do not mention the volatility of revenue, which is dependent on the price of eelctricity. Isn the volatility important?
- Do futures contracts create price volatility?
