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The hedging effect

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When evaluating a new project, especially one that is marginal, executives often ask: how would the net present value (NPV) change if we were to hedge a portion of the risk? While this is a simple question, the answer is not, and depends on a number of factors – the instrument used for hedging, the market price curves and curves for project evaluation, and even the company’s own view of risk.

Consider a potential power plant investment of €250 million. Based on the heat rate of the plant and

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CRO interview: Brett Humphreys

Brett Humphreys is head of risk management at environmental markets specialist Karbone. He talks to Energy Risk about the challenges of modelling outcomes in unpredictable times and how he’s approaching the risks at the top of his risk register

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