Course 12 of 20 · Power and Electricity Desk Academy

Forwards, Futures & Shape Hedging

Stage C, Commercial exposure and hedging. Level 5 of 10.

Hedging a shaped position with forward and futures instruments and quantifying the residual a block hedge leaves behind.

124 chapters · 11 modules · every chapter one 8 to 10 minute explainer · builds on: Course 05, Course 09, Course 10, Course 11

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How a chapter is sized

One chapter is one idea taken to the point of use

Each chapter is a single self-contained explainer of 8 to 10 narrated minutes, covering one idea to the point where you can use it.

Chapters run in order. Each one assumes only what the chapters before it taught, and capability belonging to a later course is named and deferred rather than half-covered.

Curriculum

11 modules · 124 chapters

Open any module for its full chapter list, in teaching order.

M0 The Shaped Position as a Hedging Object Ch 1-11
  1. What a Forward Hedge Transfers and What Stays on the Desk
  2. The Half-Hourly Position Nobody Can Trade
  3. The Generator's Short and the Supplier's Long
  4. Where an Electricity Exposure Actually Begins
  5. Separating Level, Shape and Location
  6. Why Matching Megawatt Hours Does Not Match the Risk
  7. The Exposure Table: Hours Against Delivery Period
  8. Building One Delivery Period Row
  9. What an Uncovered Winter Quarter Does to a Generator
  10. Who Owns the Shape Risk Once the Blocks Are Sold
  11. How the Rest of This Material Is Sequenced
M1 The Forward and Futures Instrument Set Ch 12-23
  1. The Bilateral Power Forward
  2. The Exchange-Traded Baseload Future
  3. The Peak Load Future and Its Hour Definition
  4. Reading a Power Futures Specification Line by Line
  5. The Block Traded Through a Voice Broker
  6. Novating a Power Forward Into the Clearing House
  7. Financially Settled Against Physically Delivered Electricity
  8. The Index a Power Future Settles To
  9. Where Electricity Liquidity Stops: Period and Zone
  10. Bid-Offer Width as the Real Price of a Peak Block
  11. A Second Physical Deal Used as the Cover
  12. Choosing Between a Forward and a Future for One Obligation
M2 Standard Blocks and the Decomposition of a Shape Ch 24-34
  1. The Baseload Block Defined in Hours
  2. The Peak Block and the Calendar It Depends On
  3. The Off-Peak Residue
  4. Holidays and the Block That Skips Them
  5. Decomposing a Shape into Baseload Plus a Peak Overlay
  6. The Block Ladder: Year, Season, Quarter, Month and Week
  7. Fitting Blocks to a Flat Industrial Load
  8. Fitting Blocks to a Two-Shift Factory Shape
  9. Fitting Blocks to an Evening-Peaking Domestic Shape
  10. The Overlay Arithmetic Worked End to End
  11. When Adding a Third Block Stops Paying
M3 Sizing Cover in Megawatts Ch 35-45
  1. From Megawatt Hours to Megawatts of Block
  2. The Round Megawatt Problem
  3. Netting Generation Against Supply Before Sizing
  4. The Average, the Median and the Megawatt You Should Sell
  5. Sizing the Baseload and Peak Legs Separately
  6. Choosing the Megawatt Inside a Demand Range
  7. When the Ratio Is Deliberately Below One
  8. Sizing Cover for a Position That Is Not Yet Firm
  9. A Worked Sizing, Part One: The Shape Sheet
  10. A Worked Sizing, Part Two: The Block Order
  11. Checking a Megawatt Figure Before It Reaches the Broker
M4 Hedging a Generation Shape Ch 46-56
  1. Selling a Baseload Station Forward
  2. Hedging a Mid-Merit Unit That Only Runs Some Days
  3. Covering the Spread Position Rather Than the Power Leg
  4. The Outage That Leaves a Generator Short Its Own Cover
  5. Sizing Generation Cover to Expected Availability
  6. Hedging a Wind Farm's Output With Baseload Blocks
  7. Hedging Solar Output Against a Peak Block
  8. The Cover That Pays When the Wind Does Not Blow
  9. Curtailment and the Megawatts That Cannot Be Delivered
  10. Hedging a Hydro Unit With a Storage Limit
  11. A Generation Programme Reviewed Against Realised Output
M5 Hedging a Load Shape Ch 57-67
  1. The Supplier's Obligation Seen as a Shape to Cover
  2. Hedging a Single Industrial Site
  3. Hedging an Aggregated Domestic Book
  4. The Cold Evening That Raises Both Demand and Price
  5. Hedging a Customer With a Volume Tolerance Band
  6. Churn: Customers Who Leave Mid-Programme
  7. Hedging Before the Supply Contract Is Signed
  8. Cover for a Half-Hourly Metered Portfolio
  9. The Shift an Electrified Load Puts Into a Shape
  10. Over-Cover After a Warm Winter
  11. A Supply Programme Reviewed Against Realised Offtake
M6 Granularity, Cascading and the Forward Curve Ch 68-77
  1. Why Electricity Trades in Seasons and Quarters
  2. Cascading an Annual Contract into Quarters and Months
  3. What a Cascade Does to a Position Report Overnight
  4. Trading the Granularity Gap: Month Against Quarter
  5. The Shape Premium Inside a Peak Quote
  6. The Seasonal Shape of a Power Forward Curve
  7. Rolling Cover Forward Through a Cascade
  8. Paying the Season Spread Twice a Year
  9. Timing the Move Out of an Expiring Period
  10. Granularity and the Remainder It Leaves
M7 Building and Maintaining a Hedge Programme Ch 78-88
  1. The Hedge Programme as a Schedule, Not a Trade
  2. Layering Cover Across Three Delivery Years
  3. The Ratchet: Minimum Cover by Time to Delivery
  4. Working an Order in a Period With Three Quotes
  5. Clipping a Large Peak Requirement Across Sessions
  6. Requesting a Quote for a Non-Standard Period
  7. Tagging Each Block to the Station or the Supply Book
  8. From Broker Confirmation to the Overnight Position File
  9. Adjusting the Programme When the Shape Is Restated
  10. Unwinding Cover When the Underlying Disappears
  11. The Programme File a Successor Trader Can Pick Up
M8 Quantifying the Shape Residual Ch 89-101
  1. Shape Residual Defined Hour by Hour
  2. Valuing the Remainder at Hourly Prices
  3. The Remainder Distribution Across a Delivery Month
  4. Why the Worst Hours Dominate the Result
  5. Residual Volume Risk Reported Separately
  6. The Remainder a Peak Block Leaves on a Shoulder Day
  7. The Imbalance Tail Behind the Shape Remainder
  8. The Achieved Price per Megawatt Hour as the Verdict
  9. Attributing the Gap Between Intended and Realised Margin
  10. Benchmarking the Remainder Against a Perfect Hourly Hedge
  11. The Residual Page a Power Risk Committee Reads
  12. Deciding Which Remainder to Keep and Which to Trade Away
  13. Pricing the Retained Remainder Into the Margin
M9 Cover That Needs More Than One Leg Ch 102-111
  1. Hedging at the Hub When Delivery Sits at a Node
  2. The Second Leg That Carries Locational Separation
  3. Two Legs, Two Volumes, One Reconciliation Error
  4. The Fuel Leg Behind a Thermal Hedge
  5. Hedging a Tolling Position From the Toller's Side
  6. Three Legs on One Generation Position
  7. When One Leg Is On and the Other Is Not Yet
  8. Cover for a Portfolio Split Across Two Market Zones
  9. The Cash a Block Programme Demands, and Who Owns It
  10. What a Multi-Leg Cover Leaves Standing
M10 Judging the Hedge, the Worked Case and the Limits Ch 112-124
  1. Selling More Megawatts Than the Station Can Produce
  2. Waiting for a Better Forward Price Is a View
  3. The Open Winter Quarter, Authorised in Writing
  4. Writing the Cover Ratio Into a Board Mandate
  5. Appraising a Trader Who Sold the Winter Too Early
  6. The Cold Snap Conversation With the Finance Director
  7. Why a Hedged Generator Reports a Loss It Did Not Make
  8. Designating a Power Forward as a Hedge
  9. A Worked Case, Part One: Reading the Shape
  10. A Worked Case, Part Two: The Block Programme
  11. A Worked Case, Part Three: A Quarter of Delivery
  12. A Worked Case, Part Four: The Result Explained
  13. What Block Hedging Cannot Do

The brochure gives each of these 124 chapters a paragraph on what it covers and what you can do once you have worked through it.

This is course 12 of twenty

It stands alone, and it is also the entry point to the Power and Electricity Desk Academy pathway.

Enrol or enquire See the whole pathway