SPACE WEATHER INFORMATION: OPPORTUNITY FOR ALTERNATIVE INVESTMENTS IN ELECTRICITY TRADING

摘要

Space weather is a phenomenon caused by radiation and atomic particles emitted by the Sun and stars, which impacts our everyday lives. It does not only affect the functional integrity of technical systems in space and on Earth, but may also endanger human life and health. At first glance, the Sun's effects on technology don't seems too obvious, but our increasingly technology-dependent society is sensitive to solar activity and to changes in this activity since space weather affects a broad range of technologies. Moreover, it is anticipated that energy demand will grow considerably in the future. Concurrently international trade in energy is expected also to grow. Electricity demand forecasting based on accurate weather is an important element in the operational planning of electricity buyers and sellers. To mitigate the identified price risks associated with unexpected shifts in the supply and demand of energy, firms routinely engage in buy and sell contracts at certain negotiated prices with the transaction completed at a future date. Futures and Options trading is a risk management tool that enables the negotiating parties to minimize the economic impact hazards, such as space weather, have on the price of their commodities. This paper presents an overview of the causes and consequences of the space weather phenomenon and its influence on various industries. Special attention is devoted to the relationship of space weather to on electric power industry as a basis for designing alternative investment vehicles to capitalize on more accurate forecasting capabilities. Weather derivatives hedge funds, which provide sophisticated investors an opportunity to earn money on the subtle and significant shifts in the energy trading market, are presented in order to give potential investors useful and practical information.