Load-Following Forward Contracts

David Brown and David Sappington

No 2020-14, Working Papers from University of Alberta, Department of Economics

Abstract: Load-following forward contracts (LFFCs) are becoming increasingly popular in the electricity sector. A LFFC obligates an electricity supplier to deliver at a pre specified unit price a fraction of the buyer's ultimate demand for electricity. We show that relative to more standard ("swap") forward contracts, LFFCs can increase the expected wholesale price of electricity and thereby reduce expected consumer surplus and welfare.

Keywords: load-following forward contracts; swap contracts; electricity sector (search for similar items in EconPapers)
JEL-codes: L51 L94 Q28 Q40 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2020-11-12, Revised 2021-12-31
New Economics Papers: this item is included in nep-cta, nep-ene and nep-reg
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Related works:
Journal Article: Load-Following Forward Contracts (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:ris:albaec:2020_014

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