Stabilization fund for energy prices to promote renewable energy

Abstract

The formulation of a Price Stabilization Fund to encourage the development of renewable projects is formulated. It seeks to reduce the risks associated with the volatility of the spot market prices, to facilitate access to project financing. This fund acts as a virtual trader, buying energy to developers of renewable projects, offering a fixed stabilized price in the long-term. In turn, the Fund would sell this energy in the spot market at marginal cost, assuming market risks associated with the price variability. The operation of the Fund is evaluated, seeking to determine under which operative conditions it would be viable, and to what extent it is possible to find or define operating parameters to maximize the energy supported by this instrument.