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Postgraduate Course: Advanced Energy Finance (CMSE11454)

Course Outline
SchoolBusiness School CollegeCollege of Arts, Humanities and Social Sciences
Credit level (Normal year taken)SCQF Level 11 (Postgraduate) AvailabilityNot available to visiting students
SCQF Credits10 ECTS Credits5
SummaryThe Advanced Energy Finance course aims to develop students' skills in facilitating finance for energy projects. The course will provide an advanced understanding of the links between conventional corporate finance, energy, and climate finance. The course will provide students advanced skills for undertaking project stochastic cash flow assessments and formulating project risk management strategies. Students will come away from the course with the knowledge to investigate different types of energy markets and to assess different types of incentive instruments. Students will also develop skills in managing strategic opportunities in energy project finance and operational decisions in an uncertain world.
Course description Academic Description

The course provides an overview of the different forms of energy policy instruments, and their different purposes, particularly their application to energy and climate finance. The discounted cash flow model with real option analysis will be applied for valuing energy projects.

The course will draw on both theoretical and applied energy policy and finance concepts in delivering lectures on all topics. Lectures will also be delivered by experienced practitioners, with knowledge of energy or climate finance. In addition to introducing students to the wider literature on energy economics and regulation, recent publications and case studies of different energy technologies will be used to ensure that students will come out of the course with specific skills in the evaluation of risks and opportunities associated with financing energy projects.

Student Learning Experience
Formal teaching occurs in lectures, tutorials, and computer lab sessions, much of the learning will be the result of students' own reading and reflection, and preparation for coursework. A high degree of student participation is expected, through in-class discussions. Scholarly endeavors are fundamentally about building on the discoveries and insights of others, and we hope that team cooperation in the group assessment will enrich all students. There will be time for questions and discussion in class as well as practice sessions for cash flow modelling in computer labs.

Outline Content

1. Evolution of the electricity market in the UK
2. Finance for renewable energy projects
3. Finance for carbon capture and storage projects
4. Energy market in China and India
5. Stochastic cash flow modelling
6. Real option analysis
7. RD&D and Technology Learning
8. Demand side management and energy service contracts
9. Climate risk management

Student Learning Experience

The course includes a number of guest speakers, either taught in person or deliver via Skype for overseas speakers. This provides practical real-world insights alongside the more theoretical aspects of the course.

The course will be taught through weekly lectures and computer lab session to practice knowledge.

Entry Requirements (not applicable to Visiting Students)
Pre-requisites Co-requisites
Prohibited Combinations Other requirements None
Course Delivery Information
Academic year 2020/21, Not available to visiting students (SS1) Quota:  None
Course Start Block 2 (Sem 1)
Timetable Timetable
Learning and Teaching activities (Further Info) Total Hours: 100 ( Lecture Hours 10, Seminar/Tutorial Hours 5, Programme Level Learning and Teaching Hours 2, Directed Learning and Independent Learning Hours 83 )
Assessment (Further Info) Written Exam 0 %, Coursework 100 %, Practical Exam 0 %
Additional Information (Assessment) Essay (Individual) 50% - Assesses LO4
Report (Group) 50% - Assesses LO1, LO2, LO3, LO4, LO5

Feedback For workshop cases, formative verbal feedback will be provided to the students each week during the sessions. Feedback will be provided by the course organiser on the summative assessment.
No Exam Information
Learning Outcomes
On completion of this course, the student will be able to:
  1. Understand and critically discuss financial modelling and financial markets for energy cases.
  2. Develop stochastic economic assessment models for different energy projects.
  3. Evaluate the trends for technology development in the energy sector.
  4. Illustrate the structure of energy policy and regulation in different regions.
  5. Understand how to incorporate environmental and climate issues in energy project finance.
Reading List
Pre-requisite readings:

GARP (Global Association of Risk Professionals), 2009. Foundations of Energy Risk Management, Wiley Finance.

Mott MacDonald, 2011. UK Electricity Generation Costs: Update.
generation-costs-update-.pdf (Methodology Section)

Course readings:

DBEIS (Department for Business, Energy & Industry Strategy), 2018. UK Energy in Brief 2018.

IEA (International Energy Agency), 2018. World Energy Investment 2018.

IPCC (Intergovernmental Panel on Climate Change), 2018. AR6 Synhesis Report: Climate Change 2022.

James, T. 2008. Energy Markets: Price Risk Management and Trading, Wiley Finance.

Palisade, 2018. Petrobas Uses @Risk for E&P Analysis.

(WEC) World Energy Council, The road to resilience: Financing resilient energy infrastructure.
Additional Information
Graduate Attributes and Skills Knowledge and Understanding

After completing this course, students should be able to:
- Apply the understanding of energy finance to solve financial cases in the energy sector
- Critically assess different energy markets and evaluate their outlooks
- Understand regulation and permit processes in energy finance
- Understand the process and risk profile of major energy technologies
- Apply real option analysis and stochastic modelling techniques to assess the value of uncertainties in energy finance
- Identify potential sources of finance for energy project cases

Practice: Applied Knowledge, Skills and Understanding

After completing this course, students should be able to:
- Develop basic stochastic cash flow models for energy projects
- Demonstrate skills in real option analysis
- Identify sources of finance for energy projects
- Formulate energy risk management strategies
- Evaluate the future development trends of energy technologies

Cognitive Skills

After completing this course, students should be able to:
- Critically evaluate new and complicated ideas
- Investigate the level of risk in project finance
- Offer creative solutions and insights on complex issues
- Develop excellent communication skill incl. presentation and writing skills
- Work with team members to deliver a focused objective

Communication, ICT, and Numeracy Skills

After completing this course, students should be able to:
- Communicate technical, conceptual and critical information clearly and concisely.
- Use Excel spreadsheets with @risk to manage uncertainties in energy projects and develop project finance cases and risk management strategies.

Autonomy, Accountability and Working with Others

After completing this course, students should be able to:
- Provide and receive feedback from peers and the course organiser.
- Collaborate with others from different professional knowledge, educational and cultural backgrounds.
KeywordsNot entered
Course organiserDr Xi Liang
Tel: (0131 6)51 5328
Course secretaryMs Rhiannon Pilkington
Tel: (0131 6)50 8072
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