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Hence, spot and forward electricity prices tend to represent the inherently stochastic nature of these resources, while risk management is a measure taken by agents, especially hydro power plants (HPPs) to hedge against deep financial losses. A HPP goal is to maximize its profit considering uncertainties in forward electricity prices, spot prices, and generation scaling factor (GSF) for years ahead. Therefore, the objective of this work is to simulate the real decision-making process of a HPP, where they need to have a perspective of the forward market and future spot price assessment to negotiate forward electricity contracts. To do so, the present work models the uncertainty in electricity forward prices via two-stage stochastic programming, assessing the benefits of the stochastic solution in comparison to the deterministic one. In addition, different risk aversion levels are assessed using conditional value at risk (CVaR). An important conclusion is that the results show that the greater the HPP risk aversion is, the greater the energy selling via electricity forward contracts. Moreover, the proposed model has benefits in comparison to a deterministic approach.<\/jats:p>","DOI":"10.3390\/en16031173","type":"journal-article","created":{"date-parts":[[2023,1,23]],"date-time":"2023-01-23T01:36:26Z","timestamp":1674437786000},"page":"1173","update-policy":"https:\/\/doi.org\/10.3390\/mdpi_crossmark_policy","source":"Crossref","is-referenced-by-count":7,"title":["Considering Forward Electricity Prices for a Hydro Power Plant Risk Analysis in the Brazilian Electricity Market"],"prefix":"10.3390","volume":"16","author":[{"ORCID":"https:\/\/orcid.org\/0000-0002-4049-2420","authenticated-orcid":false,"given":"Arthur","family":"Lauro","sequence":"first","affiliation":[{"name":"Electrical Energy Department, Federal University of Juiz de Fora, UFJF, Juiz de Fora 36036-330, Brazil"}]},{"given":"Daniel","family":"Kitamura","sequence":"additional","affiliation":[{"name":"Electrical Energy Department, Federal University of Juiz de Fora, UFJF, Juiz de Fora 36036-330, Brazil"}]},{"given":"Waleska","family":"Lima","sequence":"additional","affiliation":[{"name":"Electrical Energy Department, Federal University of Juiz de Fora, UFJF, Juiz de Fora 36036-330, Brazil"}]},{"ORCID":"https:\/\/orcid.org\/0000-0002-7663-235X","authenticated-orcid":false,"given":"Bruno","family":"Dias","sequence":"additional","affiliation":[{"name":"Electrical Energy Department, Federal University of Juiz de Fora, UFJF, Juiz de Fora 36036-330, Brazil"}]},{"ORCID":"https:\/\/orcid.org\/0000-0003-4708-4574","authenticated-orcid":false,"given":"Tiago","family":"Soares","sequence":"additional","affiliation":[{"name":"Center for Power and Energy Systems, Institute for Systems and Computer Engineering, Technology and Science, 4200-465 Porto, Portugal"}]}],"member":"1968","published-online":{"date-parts":[[2023,1,20]]},"reference":[{"key":"ref_1","doi-asserted-by":"crossref","first-page":"1467","DOI":"10.1109\/TPWRS.2011.2182664","article-title":"Strategic generation investment considering futures and spot markets","volume":"27","author":"Kazempour","year":"2012","journal-title":"IEEE Trans. Power Syst."},{"key":"ref_2","unstructured":"Maceira, M.P., Terry, L.A., Costa, F.S., Dam\u00e1zio, J.M., and Melo, A. (2002, January 24\u201328). Chain of optimization models for setting the energy dispatch and spot price in the Brazilian system. Proceedings of the Proceedings of the Power System Computation Conference (PSCC), Seville, Spain."},{"key":"ref_3","doi-asserted-by":"crossref","first-page":"503","DOI":"10.1016\/j.eneco.2015.06.021","article-title":"Hedging strategies in energy markets: The case of electricity retailers","volume":"51","author":"Boroumand","year":"2015","journal-title":"Energy Econ."},{"key":"ref_4","first-page":"2581","article-title":"A stochastic decision-making model for an electricity retailer with intermittent renewable energy and short-term demand response","volume":"10","author":"Qiao","year":"2018","journal-title":"IEEE Trans. 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Prod."},{"key":"ref_9","doi-asserted-by":"crossref","first-page":"1331","DOI":"10.1016\/j.energy.2016.09.064","article-title":"Risk-averse portfolio selection of renewable electricity generator investments in Brazil: An optimised multi-market commercialisation strategy","volume":"115","author":"Maier","year":"2016","journal-title":"Energy"},{"key":"ref_10","doi-asserted-by":"crossref","first-page":"111129","DOI":"10.1016\/j.enpol.2019.111129","article-title":"The impact of the generation mix on the current regulatory framework for hydropower remuneration in Brazil","volume":"137","author":"Machado","year":"2020","journal-title":"Energy Policy"},{"key":"ref_11","unstructured":"(2021, February 07). C\u00e2mara de Comercializa\u00e7\u00e3o de Energia El\u00e9trica, CCEE. 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