Price Risk Management in Electricity Markets

Price risk has became a hot issue after the electricity market failure in California. The theory and practice show a strong interest in this field, and a considerable amount of research literature emerged recently. This paper reviews recent research systematically, in order to pave the way to research price risk management in electricity markets. After summarizing recent literature form three aspects, this paper proposes that we should focus on introducing the risk control ability into the electricity auction, and designing a auction mechanism which can control market risk and enhance the economic efficiency simultaneously.