Discussion:
The rules of the Syldavian electricity market stipulate that all participants must trade energy exclusively through the Power Pool. However, the Syldavia Aluminum Company (SALCo) and the Northern Syldavia Power Company (NSPCo) have signed a contract for difference for the delivery of 200MW on a continuous basis at a strike price of 16 $/MWh.
a. Trace the ?ow of power and money between these companies when the pool price takes the following values: 16$/MWh, 18$/MWh and 13 $/MWh.
b. What happens if during one hour the Northern Syldavia Power Company is able to deliver only 50 MWh and the pool price is 18 $/MWh?
c. What happens if during one hour the Syldavia Aluminum Company consumes only 100MWh and the pool price is 13 $/MWh?