Risk hedging against the fuel price fluctuation in energy service business

Bannai, Masaaki; Tomita, Yasushi; Ishida, Yukisato; Miyazaki, Takahiko; Akisawa, Atsushi; Kashiwagi, Takao

doi:10.1016/j.energy.2007.05.003

Cited by 22 publications

(9 citation statements)

References 5 publications

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“…ESCOs profit from retaining the difference between the customer payments for delivered energy and other services and loan payments to the lender. Furthermore, several countries in Asia report that ESCOs "share savings" with customers [33,34]. The shared savings model is a fundamentally different business model than what is typically found in the U.S. ESCO industry where excess savings accrue to the customer [2].…”

Section: Us Esco Industry In a Global Contextmentioning

confidence: 98%

A method to estimate the size and remaining market potential of the U.S. ESCO (energy service company) industry

Stuart

Larsen

Goldman

et al. 2014

Energy

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a b s t r a c tThis study presents a method to estimate the market investment potential for ESPC (energy-saving performance contracts) and annual blended energy savings remaining in buildings typically addressed by U.S. ESCOs (energy service companies). We define ESCOs as companies for whom performance-based contracting is a core business activity. The market potential analysis incorporates market penetration estimates provided by industry experts in late 2012, data on U.S. building stock typically addressed by ESCOs, and typical project investment costs from a database of 4000 þ projects. ESCO industry revenue growth significantly outpaced U.S. GDP (gross domestic product) growth during 2009e2011. We estimate that the remaining investment potential in facilities typically addressed by the ESCO industry ranges from~$71 to $133 billion. Our analysis includes ESCO industry size and growth projections drawing on information from interviews with ESCO executives conducted in late 2012. The U.S. ESCO industry could grow in size from $6 billion in 2013 to~$7.5 billion by 2014, but this growth is contingent on enabling policies. The U.S. ESCO industry is similar in size to the ESCO industries in Germany, France, and China. Our estimation approach could be adapted for other countries with the caveat that ESCO industry definitions and revenue reporting practices vary across countries.Published by Elsevier Ltd.

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Section: Us Esco Industry In a Global Contextmentioning

confidence: 98%

A method to estimate the size and remaining market potential of the U.S. ESCO (energy service company) industry

Stuart

Larsen

Goldman

et al. 2014

Energy

View full text Add to dashboard Cite

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“…Some empirical studies such as Allayannis and Weston [45], Carter et al [46], Bannai et al [47], Chen et al [48], Treanor et al [49], Brusset and Bertrand [50], Luo et al [51], Swidan and Merkert [52], Merkert and Swidan [53] demonstrated that financial derivatives enhanced firms' financial performance. Alam and Gupta [54] find that firms engaged in hedging compared to non-hedgers have less volatility in firm's value.…”

Section: Financial Hedgingmentioning

confidence: 99%

The analysis of bullwhip effect in supply chain based on hedging strategy compared with optimal order quantity strategy

et al. 2021

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The bullwhip effect is one of the most important problems in the supply chain management. It can cause large inefficiency in supply chain. Although there are many researches about bullwhip effect, few studies have investigated this phenomenon caused by product price fluctuation. In this paper we consider a two-period supply chain consisting of one supplier, one wholesaler and one retailer. The wholesale price may increase greatly in the beginning of second period. If this happens, a large number of end customers will go to purchase the product from retailer. For managing the end customers' demands in the second period, we consider two ordering strategies available to the retailer including optimal order quantity strategy and hedging strategy with call option. For each strategy, we calculate the bullwhip effect ratio for two periods and compare the results. We found that the lower exercise price in hedging strategy compared with the wholesale price in the optimal order quantity strategy must not contribute to extra product purchase. The research provides new insights into how hedging strategy can reduce bullwhip effect.

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“…Financial barriers are found to be the lack of funds for awareness and the insufficiency of financial support of energy companies. Bannai et al (2007) using financial derivatives and actual data from existing plants, show how the concepts and tools of financial engineering can be used to hedge the risks due to volatility of fuel and electricity costs to increase the stability of the profit associated with energy business [20].…”

Section: Energy Savings and Project Financingmentioning

confidence: 99%

The Risks of Financing Energy in Turkey: Heading for a Rocky Road

Okay¹

2014

OJEE

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After the implementation of Energy Efficiency Law (EEL) in Turkey, Turkish engineering firms show considerable interest in energy savings projects. There is a growing sign of an energy efficiency implementation in Turkey. However, energy importation costs of Turkey still present a challenge leading to huge financial burdens. This paper explores the energy financing in Turkey and the likelihood of risks after the establishment of structural reforms. The so-called structural problems on the agenda of Turkey are emphasized during the crisis. Actually, global crisis affected the lending conditions herein counterparty risk and restricted the relations of enterprises and banks. In this study, it is argued that there are strong barriers for the future energy saving industry in Turkey made up of macroeconomic , micro-economic and financial risks coming through both domestic and global means.

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Risk hedging against the fuel price fluctuation in energy service business

Cited by 22 publications

References 5 publications

A method to estimate the size and remaining market potential of the U.S. ESCO (energy service company) industry

A method to estimate the size and remaining market potential of the U.S. ESCO (energy service company) industry

The analysis of bullwhip effect in supply chain based on hedging strategy compared with optimal order quantity strategy

The Risks of Financing Energy in Turkey: Heading for a Rocky Road

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