Abstract
The ongoing developments in the electricity market, in particular the establishment of the Prague Energy Exchange (PXE) and the associated transfer from campaign-driven sale to continuous trading, represent a significant change for power companies. Power producing companies can now optimize the sale of their production capacities with the objective of maximizing profit from wholesale electricity and supporting services. The Trading Departments measure the success rate of trading activities by the gross margin (GM), calculated by subtracting the realized sales prices from the realized purchase prices and the production cost, and indicate the profit & loss (P&L) to be subsequently calculated by the Control Department. The risk management process is set up on the basis of a business strategy defining the volumes of electricity that have to be sold one year and one month before the commencement of delivery. At the same time, this process defines the volume of electricity to remain available for spot trading (trading limits).
Highlights
To assess the performance of trading in electricity, it is advisable to measure the profitability of electricity trading position will be measured.The profitability of an electricity trading position expresses the realized profit in relation to the expression of the closed position values and the expected profit with respect to the market value of the open position
The total value of gross margin (GM) from the closed position is calculated by adding up the closed historical positions and the closed future positions for a time window of one year
GM from the closed historical position is to be calculated as the difference between the sales revenues and the production costs and the purchase costs
Summary
To assess the performance of trading in electricity, it is advisable to measure the profitability of electricity trading position will be measured. The profitability of an electricity trading position expresses the realized profit in relation to the expression of the closed position values and the expected profit with respect to the market value of the open position. It consists of the following two basic components:. · Market value of the open position (“unrealized profit”)
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