Managing financial risks for natural gas-fired power plants

Deregulation has brought significant challenges to risk management strategies in electricity markets. High volatilities in fuel prices, the spikes in electricity prices, and varying operational characteristics expose the power generation utilities to high financial risks. The focuses of this paper are to identify the risks, classify and characterize the diverse approaches, locate the gaps and provide future research direction to the valuation of power generation utilities, particularly, natural gas-fired power plants.