Market Price Risks of Merchant Generation

The current depressed financial status of many developers illustrates vividly that merchant generation is a risky business. The author segregates the market price risks of merchant generation into short-term, medium-term, and long-term effects, each of which is driven by entirely different causal forces. By analyzing the underlying dynamics, he is able to estimate the uncertainty in key financing measures such as debt coverage, equity return, and present value.