A French energy-intensive industrial company has been paying high costs for its power and gas consumption. With a few suppliers, it has entered fixed price bilateral contracts which offer some volume flexibility.
The challenge[su_list icon="icon: arrow-circle-right" icon_color="#1f1661"]
Due to market illiquidity, proxy hedging leads to
Critical questions and factors
Depending on the company’s risk appetite, it can adopt one of these strategic energy procurement approaches which then can be tailored to its specific situation:[/row] [su_row class="text-center"] [su_column size="1/3"]
Price LockingWhen certainty is priority, this strategy is designed to fix procurement costs upfront so that any movement in energy market prices will not impact the price the company pays for commodities.[/su_column][su_column size="1/3"]
Price CappingWhen budget protection is priority, this strategy is designed to allow for protection against rising markets enabling the company to work to a budget, while still capturing downside price movements.[/su_column][su_column size="1/3"]
Dynamic Price OptimizationWhen cost optimization is priority, or the company has a variable consumption profile, this strategy allows partial cost protection, in exchange for potential profit from volatile spot markets.[/su_column] [/su_row] [/toggle] [toggle title="Strategy 1: Price Locking"] In a price locking strategy, the total energy requirement is bought in a single transaction, prior to the start of the processing period. However, it is important to have the right timing for purchase in order to achieve a competitive price. In order to strike an optimum time for price locking, we:
Explore the online suite of interactive applications. This is a demo reproduction of fully-fledged solutions designed and implemented in different client projects.Interactive Apps
Welcome to Trading Integral Solutions website! To register an account, please fill out the form below.
Hi there! Use your Trading Integral Solutions client login and password to login. If you are not registered, then click on the registration tab and follow the instructions.
Forgot your username or lost your password? No worries, simply enter your username or email and we'll send you new login details.
Please rate our app here.