Good English level (the class will be taught in English). Knowledge of statistics/econometrics and microeconomics is strongly reccomended.

Course objectives

The objective of the course is to introduce students to the current issues in energy economics. Through course lectures, class projects and assignments, the students will learn about contemporary issues in energy economics. Some of the topics that students will learn about include: European energy policy, regulation of energy sectors, electricity, gas, heat and renewable energy markets, capital budgeting in regulated and liberalized markets. After successful completion of the course, the students will be capable to critically assess developments in the energy sector. The course will also prove beneficial to those students planning to pursue a career in energy-related positions.

Course objectives

The objective of the course is to introduce students to the current issues in energy economics. Through course lectures, class projects and assignments, the students will learn about contemporary issues in energy economics. Some of the topics that students will learn about include: European energy policy, regulation of energy sectors, electricity, gas, heat and renewable energy markets, capital budgeting in regulated and liberalized markets. After successful completion of the course, the students will be capable to critically assess developments in the energy sector. The course will also prove beneficial to those students planning to pursue a career in energy-related positions.

Expected learning outcomes

After completing the course, the students will have acquired the following:

• Understanding of the workings of energy markets in general and principles by which European energy policy is reflected in national energy policies.
• Understanding of the challenges linked to the energy transition
• Critically discuss the challenges due to materials' risks and renewables
• Verbal and written communication: through presenting discussed case studies, the students will improve their communication and presentation skills crucial in today's business world.

Expected learning outcomes

After completing the course, the students will have acquired the following:

• Understanding of the workings of energy markets in general and principles by which European energy policy is reflected in national energy policies.
• Understanding of the challenges linked to the energy transition
• Critically discuss the challenges due to materials' risks and renewables
• Verbal and written communication: through presenting discussed case studies, the students will improve their communication and presentation skills crucial in today's business world.

Schedule

WEEK1

CLASS1 Introduction and methods

FS: Chapter1 -2

C-F: Measurement units Chapter 1

CLASS 2 Energy Markets

FS: Chapter 2

• Coal (B, chapter 16 +WEO)

• Oil (B, chapter 14 + WEO)

• Gas (B, chapter 15+ WEO)

• Uranium WEO, several years. Cost of capital, finance, and nuclear power.

WEEK 2

CLASS 3-5  Management of exhaustible Resources

Rare materials and the energy transition

JRC, The role of rare earth elements in wind energy and electric mobility

JRC, Supply chain analysis and material demand forecast in strategic technologies and sectors in the EU -; A foresight study

Intertemporal optimization and depletable resource allocation (T-L, chapter 5, 6)

John Livernois, On the Empirical Significance of the Hotelling Rule , Review of Environmental Economics and Policy, 2009

WEEK 3

CLASS  6 A primer on auction theory and an Auction game

Vijaj Krishna : Auction Theory, 2010

CLASS 7-10 Introduction to the electricity markets (C-F, chapters 3-4)

• How do electricity markets work: DA, IM, balancing (C-F, chapter 5 &11)

• Optimal dispatching in the DA

• Centralised solution (C-F, chapter8)

• Market solution (C-F, chapter 10)
• Game on electricity markets

WEEK 4

CLASS 11 Competition in wholesale electricity markets (C-F chapter 4 and 12)

CLASS 12 Market power in the wholesale electricity markets (C-F chapter 13)

Severin Borenstein: Understanding Competitive Pricing and Market Power in Wholesale Electricity Markets, Electricity Journal, 2000 (https://faculty.haas.berkeley.edu/borenste/download/ElecJo00MktPower.pdf)

Paul Joskow: Lessons Learned From Electricity Market Liberalization, The Energy Journal, 29 (2), 2008

WEEK 5

CLASS 13 Optimal investment in power generation (C-F chapter 21+ FS chapter 4)

CLASS 14 Energy-only markets (C-F chapter 22)

CLASS 15 -16 Capacity markets (C-F chapter 23)

 *****ASSIGNEMENT 1 (group work)*********

G1: How to measure, detect and control market power

G2: How to stimulate new investments with different market structures

WEEK 6

CLASS 17: Investment and financial instruments for the electricity markets: Call and put options and the role of forward markets

Class 18:  Forward markets and wholesale market power

Sebastian Schwenen and Karsten Neuhoff Renewable Energy and Equilibrium Hedging in Electricity Forward Markets, The Energy Journal, 45(5), 2024

WEEK 7

Class 19-20: Discussion based on the group work and summary

Natalia Fabra: Reforming European electricity markets: Lessons from the energy crisis, Energy Economics, 2023

 

Schedule

WEEK1

CLASS1 Introduction and methods

FS: Chapter1 -2

C-F: Measurement units Chapter 1

CLASS 2 Energy Markets

FS: Chapter 2

• Coal (B, chapter 16 +WEO)

• Oil (B, chapter 14 + WEO)

• Gas (B, chapter 15+ WEO)

• Uranium WEO, several years. Cost of capital, finance, and nuclear power.

WEEK 2

CLASS 3-5  Management of exhaustible Resources

Rare materials and the energy transition

JRC, The role of rare earth elements in wind energy and electric mobility

JRC, Supply chain analysis and material demand forecast in strategic technologies and sectors in the EU -; A foresight study

Intertemporal optimization and depletable resource allocation (T-L, chapter 5, 6)

John Livernois, On the Empirical Significance of the Hotelling Rule , Review of Environmental Economics and Policy, 2009

WEEK 3

CLASS  6 A primer on auction theory and an Auction game

Vijaj Krishna : Auction Theory, 2010

CLASS 7-10 Introduction to the electricity markets (C-F, chapters 3-4)

• How do electricity markets work: DA, IM, balancing (C-F, chapter 5 &11)

• Optimal dispatching in the DA

• Centralised solution (C-F, chapter8)

• Market solution (C-F, chapter 10)
• Game on electricity markets

WEEK 4

CLASS 11 Competition in wholesale electricity markets (C-F chapter 4 and 12)

CLASS 12 Market power in the wholesale electricity markets (C-F chapter 13)

Severin Borenstein: Understanding Competitive Pricing and Market Power in Wholesale Electricity Markets, Electricity Journal, 2000 (https://faculty.haas.berkeley.edu/borenste/download/ElecJo00MktPower.pdf)

Paul Joskow: Lessons Learned From Electricity Market Liberalization, The Energy Journal, 29 (2), 2008

WEEK 5

CLASS 13 Optimal investment in power generation (C-F chapter 21+ FS chapter 4)

CLASS 14 Energy-only markets (C-F chapter 22)

CLASS 15 -16 Capacity markets (C-F chapter 23)

 *****ASSIGNEMENT 1 (group work)*********

G1: How to measure, detect and control market power

G2: How to stimulate new investments with different market structures

WEEK 6

CLASS 17: Investment and financial instruments for the electricity markets: Call and put options and the role of forward markets

Class 18:  Forward markets and wholesale market power

Sebastian Schwenen and Karsten Neuhoff Renewable Energy and Equilibrium Hedging in Electricity Forward Markets, The Energy Journal, 45(5), 2024

WEEK 7

Class 19-20: Discussion based on the group work and summary

Natalia Fabra: Reforming European electricity markets: Lessons from the energy crisis, Energy Economics, 2023

Teaching methods

Class materials (slides, papers etc.) will be available in Moodle. Compulsory books are written below.

Classes will be held monday-tuesday-wednesday 16-18

 

Evaluation method

30% of the final mark is determined by the assignments 10% by class participation, the remaining 60% of the final mark will be determined by a written exam at the end of the course.

Evaluation method

30% of the final mark is determined by the assignments 10% by class participation, the remaining 60% of the final mark will be determined by a written exam at the end of the course.