Call-options in Peer-to-Peer Energy Markets

Jaysson Guerrero, Thomas Morstyn

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract / Description of output

This paper proposes the novel application of call-options for financial loss mitigation in a peer-to-peer (P2P) energy market. P2P energy markets present the opportunity for end-users to trade electricity among themselves by managing their electricity usage and production capabilities. But variability characteristics of renewable resources pose a fundamental challenge to their integration into the grid as well as participating in emerging P2P energy markets. The growing penetration of renewable supply will increase the need for tools to mitigate potential energy traders' financial losses. This paper proposes and evaluates the application of call-option contracts in P2P markets to hedge against financial losses related to power shortfall in renewable supply. A case study is presented, showing that P2P traders might have to bear financial losses when they cannot meet their market obligations, and how options can be used to mitigate such losses.

Original languageEnglish
Title of host publication2021 IEEE PES Innovative Smart Grid Technologies - Asia, ISGT Asia 2021
PublisherInstitute of Electrical and Electronics Engineers
ISBN (Electronic)9781665433396
DOIs
Publication statusPublished - 24 Feb 2021
Event2021 IEEE PES Innovative Smart Grid Technologies - Asia, ISGT Asia 2021 - Brisbane, Australia
Duration: 5 Dec 20218 Dec 2021

Publication series

Name2021 IEEE PES Innovative Smart Grid Technologies - Asia, ISGT Asia 2021

Conference

Conference2021 IEEE PES Innovative Smart Grid Technologies - Asia, ISGT Asia 2021
Country/TerritoryAustralia
CityBrisbane
Period5/12/218/12/21

Keywords / Materials (for Non-textual outputs)

  • Call-options
  • distributed energy resources
  • local energy markets
  • peer-to-peer energy trading
  • smart grids
  • transactive energy

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