Markets, Products, Pricing & Trading

About the Course

The programmes “Power, Power Markets & Trading” are specifically designed to expand students’ knowledge of, and skills with respect to electricity. The programmes cover electricity production, electricity transmission & infrastructure, electricity delivery & consumption, organisation of the European power markets, the role of market participants, regulation of the European electricity markets, the role of governments, tariff setting & taxation, power-related products & their pricing, trading of power, power derivatives, power trading platforms, power asset & portfolio management, asset-backed trading, optimisation of power plants, power trading strategies, and trading-related processes, such as settlement, invoicing, valuation of gas positions & finance.

Objectives

The educational programme “Power” (Basic level) can be followed onsite (in a class), or online (as elearning package).

The full educational programme includes various modules, study materials, an exam and certification. Students who pass the exam can choose to be registered as Chartered Professional with Entrima’s charter.

Course Contents

The power value chain

  • About electricity generation & consumption
  • Covering transmission in a nutshell

Power generation – Facilities & their characteristics

  • About power plants, efficiency, carbon intensity & ramping rates
  • Concerning cost of investment & maintenance and marginal cost

Gross processing margin – Spark & dark spread

  • About the margin of gas-fired and coal-fired power plants
  • Concerning dispatch, tolling cost and negative margins

Transmission – Cables, TSOs & balancing

  • About electricity transmission & congestion management
  • Concerning the role of TSOs and balancing regimes

Power pricing – The merit order

  • About supply & demand and the ranking of marginal cost levels
  • Concerning power consumption – Profiles & shaping

Power products

  • Power-specific products (15min.blocks; baseload; peak products)
  • Concerning the difference between spot and forward markets

Renewables – Impact on pricing

  • About wind & PV – Imbalances & shifts in the merit order
  • Concerning uncertainty with respect to production forecasts

Dispatch – Allocation of facilities, impact of weather & trading

  • Re the allocation of generation capacity and/or trading power
  • Concerning decision making processes at dispatch units

Market coupling – Cross-border transport capacity

  • About market coupling throughout Europe & its consequences
  • The optimal flow of power & trading for delivery the day ahead

Daily auctions – Price curves & matching

  • About pricing – supply and demand stacks at auctions
  • Concerning bidding strategies for generation capacity

Exam & Certification

Objectives

The programmes “Power, Power Markets & Trading” are specifically designed to expand students’ knowledge of, and skills with respect to electricity. The programmes cover electricity production, electricity transmission & infrastructure, electricity delivery & consumption, organisation of the European power markets, the role of market participants, regulation of the European electricity markets, the role of governments, tariff setting & taxation, power-related products & their pricing, trading of power, power derivatives, power trading platforms, power asset & portfolio management, asset-backed trading, optimisation of power plants, power trading strategies, and trading-related processes, such as settlement, invoicing, valuation of gas positions & finance.

Course Contents

Power forward market

  • Convering the differences between spot & forward markets.
  • About price volatility in spot & forward markets; mean reversion.

Power exchanges & brokers

  • About OTC markets and trading venues for power.
  • Concerning market liquidity, notional value and open interest.

Power forwards & futures – The varieties

  • Concerning the most commonly known contracts.
  • The time-to-maturity and delivery moment/period.

Power forwards & futures – The application

  • Covering asset-backed trading as well as proprietary trading.
  • About managing power-related exposures.

Power forwards curves – Pricing of power forwards & futures

  • About contango & backwardation, including seasonality.
  • Covering the convenience yield.

Hedging power production & consumption capacity

  • About procurement & sales on a forward basis; contract management.
  • Covering assuring future cash flows by price fixation.

Hedging power transmission capacity

  • Locking in potential margins on a forward basis.
  • Covering location spreads; what these are & how to trade these.

Settlement of power forwards & futures – Part 1

  • Including physical delivery & cash settlement.
  • Covering nomination & periodic invoicing.

Settlement of power forwards & futures – Part 2

  • Concerning the process of cascading.
  • Covering the consequences of it for the power portfolio.

Exam & Certification

Objectives

The programmes “Power, Power Markets & Trading” are specifically designed to expand students’ knowledge of, and skills with respect to electricity. The programmes cover electricity production, electricity transmission & infrastructure, electricity delivery & consumption, organisation of the European power markets, the role of market participants, regulation of the European electricity markets, the role of governments, tariff setting & taxation, power-related products & their pricing, trading of power, power derivatives, power trading platforms, power asset & portfolio management, asset-backed trading, optimisation of power plants, power trading strategies, and trading-related processes, such as settlement, invoicing, valuation of gas positions & finance.

Course Contents

Accounting – Book structure & internal transfers

  • About internal transactions & prices, including premiums.
  • Concerning book structures, cost allocation & P/L responsibility.
  • Covering upstream, midstream & downstream activities.

Customer portfolio

  • About power supply contracts; including load forecast.
  • Concerning circumstances, e.g. weather, economic situation.

Physical power assets

  • About make-or-buy decisions & asset-backed trading.
  • Aggregation of rights & obligations (prod., cons. & settlement).

Power swaps – Physical settlement

  • Concerning solutions for problem solving in the physical world.
  • About basis swaps, or location swaps.

Power swaps – Cash settlement

  • About financially-settled agreements, including indexation.
  • Concerning fixed-for floating contracts.

Power options – Outright options

  • About tradable contracts in the OTC markets & on exchange.
  • Pricing of power options; intrinsic value plus time value.

Power options – Application for hedging purposes

  • About hedging natural short/long positions with call/put options.
  • About power price caps & floors.

Power options – Embedded optionality

  • About volume flexibility & swing optionality in supply contracts.
  • Covering structuring and structured deals.

Exam & Certification

Objectives

The programmes “Power, Power Markets & Trading” are specifically designed to expand students’ knowledge of, and skills with respect to electricity. The programmes cover electricity production, electricity transmission & infrastructure, electricity delivery & consumption, organisation of the European power markets, the role of market participants, regulation of the European electricity markets, the role of governments, tariff setting & taxation, power-related products & their pricing, trading of power, power derivatives, power trading platforms, power asset & portfolio management, asset-backed trading, optimisation of power plants, power trading strategies, and trading-related processes, such as settlement, invoicing, valuation of gas positions & finance.

Course Contents

Power risk management – Value-at-risk of a power position

  • About the a commonly applied method to quantify an exposure.
  • Covering the relevant time horizon and confidence level.

Power risk management – Risk off-set due to correlation

  • About statistical data and concepts, and how to apply these.
  • Concerning pairs or proxies.

Power risk management – Value-at-risk of a power portfolio

  • About the quantification of aggregated power positions.
  • Considering opposing long/short positions & correlated positions.

Power risk management – Off-setting risk (opposing exposures)

  • About risk off-setting and netting.
  • Covering portfolio integration and cross-margining.

Modelling – The real option approach

  • About production capacity & transmission capacity.
  • About management decisions, such as the right to dispatch.

Modelling – Physical power assets as real options

  • Considering power generation cap. & power transmission cables.
  • About call options on the spark/dark spread or location spread.

Modelling – Complexity: Valuation & hedging of spread options

  • About structuring, including exotic options.
  • Including spread option valuation models, e.g. Margrabe.

Modelling – Optimizing the hedges

  • About hedging strategies, e.g. proxy-hedging.
  • Concerning dynamic risk management; Delta-hedging.

Modelling – Weather elements (precipitation & wind data)

  • About the impact of renewables on the power markets.
  • Hydro: Precipitation, cascading, pump storage.
  • Wind: Concerning temperature, location, direction, wind roses, diurnal cycle, pressure gradient force, coriolis force, friction.

Exam & Certification


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