Profit-at-Risk (PaR) is a risk management quantity most often used for electricity portfolios that contain some mixture of generation assets, trading contracts and end-user consumption.
It is used to provide a measure of the downside risk to profitability of a portfolio of physical and financial assets, analysed by time periods in which the energy is delivered.
The PaR measure was originally pioneered at Norsk Hydro in Norway as part of an initiative to prepare for deregulation of the electricity market.
Petter Longva and Greg Keers co-authored a paper "Risk Management in the Electricity Industry" (IAEE 17th Annual International Conference, 1994) which introduced the PaR method.
The approach was based on monte-carlo simulations of paired reservoir inflow and spot price outcomes to produce a distribution of expected profit in future reporting periods.