Course 16 of 20 · Power and Electricity Desk Academy

Negative Prices, Scarcity & Options

Stage D, Specialised products and regional practice. Level 7 of 10.

Negative pricing, scarcity pricing and the option value of flexible assets and contracts.

118 chapters · 11 modules · every chapter one 8 to 10 minute explainer · builds on: Course 04, Course 12, Course 15

Enrol or enquire See the 118 chapters
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 · 118 chapters

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

M0 Where the Price Curve Stops Behaving Ch 1-10
  1. The Two Tails a Block Price Hides
  2. Why Electricity Has No Reservation Price
  3. The Settlement Period as the Unit of Decision
  4. Asymmetry: Why the Upper Tail Runs Further
  5. Flexibility as a Thing You Can Price
  6. Three Phenomena, One Mechanism
  7. Who Loses Money When Prices Fall Below Zero
  8. The Counterparty on the Wrong Side of a Spike
  9. What Is Assumed Before This Material Starts
  10. Where the Money Actually Sits in a Year
M1 Why a Power Price Goes Below Zero Ch 11-21
  1. The Offer Floor and What Sits Beneath It
  2. Must-Run Plant and the Cost of Stopping
  3. Support Payments That Survive a Negative Price
  4. Inflexible Output and the Technical Minimum
  5. Weather Surplus Against a Weak Demand Period
  6. A Negative Price Made by a Transmission Limit
  7. Pumping, Charging and Demand That Appears Cheaply
  8. How Deep and How Long: Describing an Episode
  9. The Same Episode in Day-Ahead and Intraday
  10. Anticipating a Negative Period Before It Clears
  11. When a Negative Price Is Telling the Truth
M2 Positioning and Bidding Through Negative Periods Ch 22-32
  1. Constructing Your Own Offer Below Zero
  2. Self-Curtailment as a Commercial Choice
  3. Buying the Trough With a Storage Position
  4. Moving Industrial Load Into a Paid-to-Consume Period
  5. Hedged Volume Through a Surplus Period
  6. Holding a Short Position Into a Surplus
  7. Imbalance Exposure When the Sign Reverses
  8. Bidding a Flexible Unit Across a Negative Block
  9. The Surplus That Lasted a Whole Weekend
  10. Explaining a Negative Result Inside the Business
  11. A Standing Policy for Sub-Zero Periods
M3 Negative Prices Inside Contracts and Charges Ch 33-42
  1. Where a Contract Is Silent About Below Zero
  2. An Index-Linked Sale Through a Negative Reference
  3. Pass-Through Terms That End Up Paying the Customer
  4. A Zero Floor Written Into a Generation Sale
  5. Volume Obligations That Bite During a Surplus
  6. Non-Energy Charges When Energy Is Free
  7. Out-of-Market Payments Meeting a Sub-Zero Period
  8. Auditing a Contract Book for Sub-Zero Behaviour
  9. Negotiating the Sub-Zero Clause You Actually Want
  10. Two Drafting Choices Tested Against One Episode
M4 How Scarcity Forms a Price Ch 43-53
  1. Tightness, Not Demand Level, Sets the Price
  2. What Happens When the Stack Runs Out
  3. The Value of Lost Load, Stated Plainly
  4. Capacity Margin and the Chance of a Shortfall
  5. Shortage Adders and Administered Price Formation
  6. Caps, Ceilings and the Limit on a Spike
  7. Shortage Handled by Instruction Instead of Price
  8. Why Shortage Clusters Rather Than Spreads
  9. Fuel Constraints Appearing as Electricity Shortage
  10. Shortage in a System Full of Renewables
  11. Reconstructing a Past Tight Period Properly
M5 Spikes, Tails and the Cost of Being Short Ch 54-64
  1. Anatomy of a Price Spike
  2. A Handful of Periods That Decide the Year
  3. Why a Smooth Distribution Misprices Electricity
  4. Measuring a Book's Exposure to Extreme Periods
  5. A Supplier Caught Short in a Tight Evening
  6. The Generator That Was Unavailable
  7. Volume Error and Price Moving Together
  8. The Cash Strain of a Spike You Are Flat Through
  9. Stress Testing a Power Book Against a Tight Week
  10. What an Extreme Period Does to a Trading Limit
  11. Behaviour Under Pressure Inside an Episode
M6 The Dispatch Right Read as an Option Ch 65-75
  1. One Period, One Option
  2. The Spread Is the Underlying
  3. Exercise Delivered by a Dispatch Instruction
  4. Start Costs as the Price of Exercising
  5. Minimum Run Time Bundles the Options Together
  6. Ramp Rate and the Option You Cannot Reach
  7. Intrinsic Worth of a Flexible Unit
  8. Extrinsic Worth: What Movement Adds
  9. Where a Peaking Unit's Value Really Comes From
  10. A Reservoir as a Right Across Many Periods
  11. Flexibility Parameters Ranked by What They Earn
M7 Valuing Flexibility So It Can Be Defended Ch 76-86
  1. Rolling Intrinsic as an Honest Method
  2. Rolling Intrinsic on a Mid-Merit Unit
  3. Where a Simulation Earns Its Place
  4. The Few Inputs a Flexibility Figure Depends On
  5. Co-Movement Between Electricity and Fuel
  6. Representing Extreme Periods Without Inventing Them
  7. Why Two Houses Value the Same Plant Differently
  8. Interrogating a Flexibility Number You Were Handed
  9. The Value You Can Capture Against the Value You Can Show
  10. Marking a Flexibility Position Through the Month
  11. Flexibility Worth in a Capital Decision
M8 Contracts That Buy and Sell the Tails Ch 87-97
  1. The Cap as Purchased Shortage Cover
  2. Choosing the Strike of a Power Cap
  3. Sizing Cap Volume Against an Hourly Shape
  4. A Floor Bought by a Generator
  5. Shaped and Period-Limited Cover
  6. A Right to Enter a Shaped Hedge Later
  7. A Physical Call Over a Unit's Output
  8. Interruptible Load as a Right You Sold
  9. Reliability-Style Instruments and the Duty to Refund
  10. Purchased Cover Against Contracted Physical Flexibility
  11. Reading a Structured Power Quote as a Set of Rights
M9 Writing Flexibility and Living With It Ch 98-107
  1. What a Desk Gives Away Without Charging
  2. Selling Cover Through the Period It Was Sold Against
  3. Covered and Uncovered Flexibility, Distinguished
  4. Several Buyers, One Flexible Unit
  5. Limits That Actually Constrain Tail Exposure
  6. Approving a Non-Standard Grant of Latitude
  7. Explaining Tail Cover to People Who Do Not Trade
  8. Incentives That Produce Badly Priced Latitude
  9. Backing a Written Cap With Physical Flexibility
  10. The Grants a Power Desk Should Simply Refuse
M10 A Worked Season and the Limits of the Method Ch 108-118
  1. The Book: A Unit, a Supply Obligation and a Hedge
  2. A Worked Season, Part One: Mapping the Tails
  3. A Worked Season, Part Two: Valuing the Unit
  4. A Worked Season, Part Three: The Cover Decision
  5. A Worked Season, Part Four: The Surplus Weekend
  6. A Worked Season, Part Five: The Cold Snap
  7. A Worked Season, Part Six: The Season Reconciled
  8. The Same Season With No Cover at All
  9. Judging Whether the Cover Was Worth Buying
  10. The Honest Limits of Tail Management
  11. Where This Capability Goes Next

The brochure gives each of these 118 chapters a paragraph on what it covers and what you can do once you have worked through it.

This is course 16 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