> For the complete documentation index, see [llms.txt](https://docs.xft.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.xft.finance/bitnet/use-cases/energy.md).
# Energy
DRS compresses energy supply chain credit tenor to RTGS.
DRS perpetual futures.
Hedging energy for end users and generator
Generator;s hedge
End users hedge
Marketer's long hedge
Marketer's short hedge
Generator's speculative positions
The “stack and roll” method poses serious cash flow risks. A firm must have sufficient capital
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to ensure that it can pay for potentially large derivative losses in the early years, that will be
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offset by gains in the physical position in future years. This problem is particularly striking
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since futures-spot price relationships
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that are beneficial for generators are
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detrimental to marketers. If both
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generators and marketers are
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employing the “stack and roll” method
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at the same time, one of them will
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experience gains while the other will experience losses in the early years of the hedge. It was
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exactly this cash flow problem associated with the “stack and roll” that caused
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Metallgesellschaft to lose $1.3 billion trying to hedge its oil marketing activities. It is this risk
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that electricity regulators must be aware of when designing policies to control the use of
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electric rate derivatives.
*Sell power*, *buy* gas
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