Energy Trading

General Information:

Content:

In the course of this module, students gain deep insights into the value chain of energy trading. Thereto, the module covers the following topics: development of european and global energy markets; energy markets as fundament for risk management; risk management of company portfolios from the perspective of energy producers, consumers and traders; grid-bound energy sources electricity and gas supplemented by references on coal, crude oil and emission certificates.

Upon successful completion of the module, students can name the most important energy market places and their products. They understand the functioning of energy markets and the central role of energy trading. Further, they understand key concepts of risk management and can compare them. Moreover, they can select organizational concepts and most important supporting processes of energy trading fitting to a given situation. They can assess the order book (e.g. mid-prices, spreads), evaluate financial products, and calculate clearing prices of interconnected systems and hedging requirements. Finally, they can analyze realistic tasks in the energy industry, transfer them into appropriate trades and trading portfolios, and explain the market price developments.

During the exercise course, students deepen their knowledge on how to program the financial operations of an order book, whether in an auctions setting or in continuous trading. They will learn how to hedge a portfolio while employing financial derivative instrument strategies. They will be able to calculate key financial indicators, such as mark-to-market valuation, build and interpret a price forwards curve, and calculate and interpret key risk measures such as Value-at-Risk and Conditional-Value-at-Risk. Furthermore, they will calculate the marginal cost of electricity generation and its impact on the economics of CO2 emissions trading. Additionally, they will learn how to set up and solve a mathematical optimization problem to decide the best generation mix setup.

Expected Knowledge:

Basic Knowledge: Understanding of energy industry and energy techniques