A company owns one generating plant and serves its own load. It is also proactively trading in an electricity market. Furthermore, the company is at the following situations for 11 August 2021 between 7:00 am and 8:00 am

• Long term contract for the purchase of 500 MW during off-peak hours at a price of 20.00 $/MWh
• Long term contract for the purchase of 500 MW during peak hours at a price of 25.00 $/MWh
• Long term contract with a major industrial user for the sale of 100 MW at a flat rate of 23 $/MWh
• The remaining customers purchase their electricity at a tariff of 24 $/MWh at off-peak and 22 $/MWh during the peak hours
• Future contract for the sale of 150 MWh at 20.00 $/MWh
• Future contract for the purchase of 200 MWh at 20.00 $/MWh
• Call option for 200 MWh at an exercise price of 20.50 $/MWh
• Put option for 150 MWh at an exercise price of 23.00 $/MWh
• Call option for 300 MWh at an exercise price of 25.00 $/MWh.
• Put option for 350 MWh at an exercise price of 20.00 $/MWh

The option fee for all the options is 1.5 $/MWh. The peak hours are defined as being the hours between 7:00 am and 8:00 pm.

The outcome for 11 August between 7:00 am and 9 am is as follows:

• The spot price is set at 23 $/MWh.
• The total load of the company is 1500 MW, including the large industrial customer.
• The power plant produces 500 MWh at an average cost of 23 $/MWh.

1. Assuming that all imbalances are settled at the spot market price and the option contract cannot be exercised, calculate the profit or loss made by the company during that hour. (6 marks)
2. Assuming that all imbalances cannot be settled at the spot market price and there is only option to exercise the option contract, calculate the profit or loss made by the company during that hour. (3 marks)
3. Calculate thevalue of the spot market would reduce the profit or loss of the company to zero for the scenario in (a)?(3 marks)
4. Calculate the value of the spot market would reduce the profit or loss of the company to zero for the scenario in (b)? (3 marks)