JEM162 - Energy Markets & Economics

Credit: 4
Status: CFS - elective
ET - elective
F,FM and B - elective
Masters - all
MEF - elective
Semester - winter
Course supervisors: Nick Elms
Mgr. Petra Valíčková
Course homepage: JEM162
Literature: There is no single textbook for this course and for this reason we try to include a lot of information in the course material discussed during the lectures. Nevertheless, there are several good books from which you can read selected chapters that link well to the topics covered in this course:

Power: A Practical Handbook, Danielle Beggs and Rajan Phakey, SNR Denton, Globe Law and Business, 2017, ISBN: 978-1905783854, 251 pages, available in the IES library.

The Economics of Electricity Markets, Barryl R. Biggar, Wiley – IEEE, 1st Edition, September 2014, ISBN: 978-1118775752, 432 pages, available in the IES library.

Making competition work in electricity, Sally Hunt, Wiley, 2002, ISBN: 978-0-471-22098-5, available online.

Steven Stoft, Power system economics: designing markets for electricity, 2002, ISBN: 978-0-471-15040-4, 496 pages (part of the book available online)
Description: This course covers a variety of theoretical and empirical topics related to the economics of the power sector. This includes concepts such as supply and demand for power, the structure of the industry (generation, transmission and distribution, retail supply), regulation of the power sector, wholesale power markets and their design (including competition issues), energy efficiency and retail supply, among other topics.

The core objective of this course is to gain a good understanding of the power sector with a focus not only on theoretical concepts but also on a more practical application of economic concepts related to power markets.

Course outline:
1. Introduction to the economics of the power sector (supply and demand for power, structure of the industry – generation, transmission and distribution, retail supply);
2. Possible models for organising the power sector, technical characteristics that affect that choice and sector liberalisation;
3. Need for economic regulation and current approaches to regulation and related concepts (cost plus or rate of return, price cap vs revenue cap, RIIO, RAB, etc.);
4. Wholesale electricity trade, including energy only markets and capacity markets, and competition issues;
5. Investment decision making in generation and transmission;
6. CO2 emissions, overview of decarbonisation policy instruments, EU ETS;
7. Renewables and energy efficiency measures; and
8. Retail supply, retail competition and retail pricing (including concepts of long run and short run marginal costs, average costs and market failures related to information).

This course will be taught in block lectures with the following schedule:

1st lecture: Friday 4th October (12:30 - 13:50)
2nd lecture: Friday 4th October (14:00 - 15:20)
3rd lecture: Friday 25th October (12:30 - 13:50)
4th lecture: Friday 25th October (14:00 - 15:20)
5th lecture: Friday 8th November (12:30 - 13:50)
6th lecture: Friday 8th November (14:00 - 15:20)
7th lecture: Friday 29th November(12:30 - 13:50)
8th lecture: Friday 29th November(14:00 - 15:20)

Please note that we do sometimes travel to Africa for work, which means that the dates of some lectures might change. Therefore, please keep your Friday afternoons free for your Energy Markets & Economics course. We will always try to give you sufficient notice in case there’s a change to the course schedule.

The final grade is based on a written empirical paper (term paper) and performance during the final exam, with the following weights:
- Written empirical paper (40%); and
- Final written exam (60%).

Moreover, you are required to get at least 50% in your final exam in order to successfully pass the course.

With respect to grading, we follow the Dean’s measure No. 17/2018 and the stipulated rules for the A-F grading using rounding up to the nearest whole percentage:
• 91% and above => A
• 81-90 % => B
• 71-80 % => C
• 61-70 % => D
• 51-60 % => E
• 0-50 % => F
July 2020




Patria Finance