Equally, one of the main reasons why financial hedging instruments like swaps and futures contracts are so significant in a place such as Texas is precisely because the US’s own long-preferred forms of government support for renewables – the ITC and the Production Tax Credit (PTC) – do not confer price stability. This is not to say that such government support has been misguided, still less immaterial. Far from it: it has been indispensable. But, in a place like Texas, where electricity is traded predominantly in the spot market and price volatility is therefore endemic, tax credits
...more
