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This paper explores strategies for mitigating foreign exchange risks in regional electricity integration, focusing on a case study from Southeast Asia. As electricity exchanges grow across borders, managing currency volatility becomes crucial for maintaining energy security and promoting clean energy. The paper examines three primary approaches for mitigating currency risk: contractual agreements, financial mechanisms, and public policy interventions. The ASEAN Power Grid (APG) serves as a key example, illustrating how investment agreements and financial instruments can reduce currency exposure. The paper also discusses the role of Multilateral Development Banks (MDBs) in providing financial tools to support currency risk management in electricity trade. It emphasizes the importance of aligning regulatory frameworks, developing financial instruments, and improving market liquidity to ensure the success of cross-border electricity exchanges. The findings offer valuable insights for regions like APG, aiming to enhance energy security and foster sustainable economic development through regional energy integration.

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International Experiences in the Mitigation of Foreign Exchange Risk in the Electricity Market: Energy Exchange in Southeast Asia

  • 会议论文

  • 发表日期：

    2026年

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  • Juan Martínez,
  • Simón Fernández-Vázquez,
  • Julián Ramírez,
  • Rafael Rosillo

摘要

This paper explores strategies for mitigating foreign exchange risks in regional electricity integration, focusing on a case study from Southeast Asia. As electricity exchanges grow across borders, managing currency volatility becomes crucial for maintaining energy security and promoting clean energy. The paper examines three primary approaches for mitigating currency risk: contractual agreements, financial mechanisms, and public policy interventions. The ASEAN Power Grid (APG) serves as a key example, illustrating how investment agreements and financial instruments can reduce currency exposure. The paper also discusses the role of Multilateral Development Banks (MDBs) in providing financial tools to support currency risk management in electricity trade. It emphasizes the importance of aligning regulatory frameworks, developing financial instruments, and improving market liquidity to ensure the success of cross-border electricity exchanges. The findings offer valuable insights for regions like APG, aiming to enhance energy security and foster sustainable economic development through regional energy integration.