HEDGING CONGESTION RISK
Dramatic Differences in Locational Prices
In a zonal market, the price of power can vary dramatically between zones. In locational marginal pricing (LMP) markets, the price of power can vary dramatically from node to node (a node is a major point of interconnection for load or for a power plant).
When a utility has load that is widely separated from resources, the potential for significant price differentials creates the potential for significant congestion costs.
APM Experience in Structured Markets (ISOs and RTOs)
At APM, the majority of our Owners and many of our Clients operate in structured markets. So we have years of experience analyzing zonal and locational prices, and making recommendations on congestion hedging strategies and the acquisition of congestion rights in PJM, the Midwest ISO, SPP, California and ERCOT.
Annual vs. Seasonal Allocations
We are equally adept at making congestion hedging recommendations that address annual allocations of transmission rights or seasonal allocations.
Monthly vs. Longer-Term Auctions
We can provide analysis and recommendations for monthly auctions, multi-month auctions or even multi-year auction mechanisms (proposed in some structured markets).
Targeted Energy Market Transactions
And, APM can analyze and recommend targeted energy market transactions - such as basis swaps - to manage congestion risk.
APM Transmission Analysis Team
Our recommendations are arrived at in part through the work of our dedicated transmission analysis team, and their use of sophisticated modeling software which looks at transmission and congestion issues in several U.S. regions on a daily and longer-term basis.
APM Services
APM can also provide a variety of services that support congestion hedging transactions and operations in structured markets, including:
Contact a Business Development Representative.