VIRTUAL INSTRUCTOR LED TRAINING (VILT)

ELECTRICITY PRICING AND MARGINAL COST ANALYSIS

Forward Pricing and Valuation in Electricity Generation

17 - 20 MAY 2021 | 4 half-day training, 4 hours per session (total 16 hours)

About The Course

Forward pricing and valuation in electricity generation is a 4 half day intensive, technical hands-on course in which attendees receive comprehensive instruction on the theory and practice of making price forecasts and assessing risk in the electricity generating industry.

 

After a discussion of electricity markets around the world, the course moves to programming and model structuring, where attendees follow the lead of the instructor in building various analyzes of forward pricing and valuation issues.

 

Exercises include analysis of supply and demand, modeling of capacity mix and capacity level optimization; construction of time series analysis for fuel prices loads and hydro generation; and project finance analysis of merchant plant investments.

 

As the course progresses, attendees apply risk assessment, option pricing, and valuation techniques in real world cases using an integrated model. In addition to building their own models, participants learn how to use fully developed models that incorporate sophisticated debt structuring, break-even analysis, contract pricing, time series equations and Monte Carlo simulation.

Course Fees

Early bird:

SGD 2,250 / USD 1,642 for 4 half-days, per participant

 

Normal price:

SGD 2,450 / USD 1,788 for 4 half-days, per participant

Learning Outcomes

  • Learn practical tools to analyse a host of issues in electricity analysis including efficient tools to work with supply and demand data; creating flexible scenario and sensitivity analysis to evaluate power prices and marginal costs; effectively presenting short-term and long-term supply and curves; development of hydro analysis; Monte Carlo simulation and other issues.
  • Create demand and supply models of electricity pricing that incorporates changes in fuel prices, new capacity, demand profiles, maintenance outages to measure hourly marginal cost and total generation cost.
  • Study the structure of market designs around the world and simulate pricing strategies through evaluation of the California crisis and simulation exercises.
  • Understand the relationship between capacity pricing, reliability, loss of load probability and reserve margins through extending the short-run supply and demand analysis and modelling outage cost with different capacity configurations.
  • Model the economic value of different types of renewable resources in alternative markets including storage hydro, run-of-river hydro, wind and solar.
  • Develop efficient ways to quickly compute the levelised electricity cost of different technologies using carrying charge factors and alternative financial models and use levelised cost analysis to develop screening models of optimal resources.
  • Evaluate long-run marginal cost of electricity cost through simulating the value of different generating resources given load curves and simulate the effects of different capital costs, heat rates and fuel prices on the long-run marginal cost.
  • Compute the effects of start-up costs, heat rate curves, and transmission constraints on the value of alternative plants and the price of electricity.

Expert Course Faculty

Our key course expert provides financial and economic consulting services to a variety of clients, he teaches professional development courses in an assortment of modelling topics (project finance, M&A, and energy). He is passionate about teaching in Africa, South America, Asia and Europe. Many of the unique analytical concepts and modelling techniques he has developed have arisen from discussion with participants in his courses. He has taught customized courses for MIT’s Sloan Business School, Bank Paribas, Shell Oil, Society General, General Electric, HSBC, GDF Suez, Citibank, CIMB, Lind Lakers, Saudi Aramco and many other energy and industrial clients. His consulting activities include developing complex project finance, corporate and simulation models, providing expert testimony on financial and economic issues before energy regulatory agencies, and advisory services to support merger and acquisition projects.

 

Our key course expert has written a textbook titled Corporate and Project Finance Modelling, Theory and Practice published by Wiley Finance. The book introduces unique modelling techniques that address many complex issues that are not typically used by even the most experienced financial analysts. For example, it describes how to build user-defined functions to solve circular logic without cumbersome copy and paste macros; how to write function that derives the ratio of EV/EBITDA accounting for asset life, historical growth, taxes, return on investment, and cost of capital; and how to efficiently solve many project finance issues related to debt structuring. He is in the process of writing a second book that describes a series of valuation and analytical mistakes made in finance. This book uses many case studies from Harvard Business School that were thought to represent effective business strategies and later turned into valuation nightmares.

 

Over the course of his career our key course expert has been involved in formulating significant government policy related to electricity deregulation; he has prepared models and analyses for many clients around the world; he has evaluated energy purchasing decisions for many corporations; and, he has provided advice on corporate strategy. His projects include development of a biomass plant, analysis and advisory work for purchase of electricity generation, distribution and transmission assets by the City of Chicago, formulation of rate policy for major metro systems and street lighting networks, advocacy testimony on behalf of low income consumers, risk analysis for toll roads, and evaluation of solar and wind projects. He has constructed many advisory analyses for project finance and merger and acquisition transactions.

 

Lastly, our key course expert was formerly Vice President at the First National Bank of Chicago where he directed analysis of energy loans and also created financial modelling techniques used in advisory projects. He received an MBA specializing in econometrics (with honours) from the University of Chicago and a BSc in Finance from the University of Illinois (with highest university honours).

TOPICS TO BE COVERED

Costs and benefits of PPA provisions

Comparison of prices in different markets

Statistical characteristics of prices

Monte Carlo simulation model of electricity using time series models

Modelling of short-run energy cost

Incorporation of renewable energy and hydro in short-run marginal cost

California Power Crisis Case Study

Risk analysis for short-term marginal cost

Theory of long-run marginal cost

Computation of levelized cost for alternative technologies

Computation of carrying charges using project finance modelling

Integrated marginal cost model for evaluating long-term prices

Case study of Supply and Demand – U.K. Market Crash

Transmission constraints and energy prices

This training course will be conducted as a Virtual Instructor Led Training (VILT). Delegates will receive a confirmation email after successful registration. 
Soft copy course materials & Certification of Completion will be provided to registered participants. 

Unique Features with powerEDGE Training

  • Pre-Course Questionnaire (PCQ) to help us focus on your learning objectives
  • Detailed course & reference manual for continuous learning and sharing
  • Practical exercises & case examples to better understand the principles
  • Limited class size to ensure one-to-one interactivity
  • Assessment at the end of the course to help you develop a personal action plan