Power Trading Interview Questions - help needed
Hi guys,
I have my first interview scheduled for a Power Trader position at a company running a virtual power plant, buying power from small distributed generators and selling back into the wholesale market, and could really use some help with interview questions that I have been asked to prep for.
Can the WSO gods of power trading please lend a hand with figuring out how to approach and solve these two? @monty09" @marcellus_wallace"
Also, I'm even a bit confused on the interpretation of these two.
Q1: Would you interpret this baseload profile as the power that the trader has already agreed to purchase from generators at certain price, and needs to hedge against? Is the interviewer saying that he is selling at a fixed price of 60/MWh during peak hours? With this assumption, the trader is effectively buying at an average price of 60.68/MWh between 9-20 hrs, which is higher than the peak price. Am reading this right? Or does this simply mean that 60/MWh is the day ahead baseload price, which can change to a marginal price during real-time (depending on actual demand)? What would you do here?
Q2: "price for all 6 periods" - is the interviewer looking for me to price an option based the average volatility and price of all 6 period? How would you interpret the 'best' period and why? Should this problem be solved using Black-Scholes?
Bit of background: I'm really looking to break into power trading, but I'm new to the market side of power (I have power engineering background) and have been studying finance (think CFA L1 material) in my own time and have also read Energy Trading and Investing by D. Edwards (very good book but only scratches the surface).
I would really appreciate as much help as you guys can give, as I finally have my shot at breaking into the industry. Thanks in advance
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power_trading_q.pdf 122.14 KB | 122.14 KB |
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