Trading techniques

Abstract: A majority of merchant power plants built during the last few years in the US are combined-cycle units fired by natural gas. This article discusses asset-backed trading strategies for a merchant single-block power plant, showing how unit dispatches can be optimised, maximising profits and providing base-load stability. By Shulang Chen

Asset-backed trading is based on economic dispatch principles, under which a generator trades with the intention of dispatching its combined-cycle unit. In contrast with speculation or arbitrage trading, asset-backed trading not only optimises unit dispatches and generates higher operating incomes for a merchant generator, but balances base-load generation, providing stability across an entire region.

Economic dispatch principles

A merchant combined-cycle power plant is considered economically

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