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Day 1

Global Electricity Markets in Transition

• Current status and future developments

• Organisation of the electricity markets

• Players Power Market

• Relationship Power and Carbon Market

• Centralized vs. Decentralize generation

• Role renewables

• Role Paris Agreement and COP 26 Glasgow

• Role Subsidies and Power Purchase Agreements

• Flexibility: Storage and Demand Response

Power Price Dynamics

• Non-storability

• Price Drivers; supply and demand, weather and others

• Evolution of volatility in energy markets

o Comparing spot with forward volatility: spikes and mean-reversion

• Seasonality

o Causes of seasonality

• Correlations

Exercise: Electricity Pricing

Day 2

Electricity Value Chain and its risks

• The electricity value chain

o Fuels, Generation, Transmission & Distribution, Wholesale, Carbon and retail

• Portfolio of Contracts

o Forward sales, retail supply, fuel, CO2, Freight, hedges etc.

• Sources of Risk

o Market, Credit ,Operational, Legal and regulatory , Business ,Strategic and Reputation Risk

Electricity Markets: Physical and Financial Trading

• Spot and forward trading of electricity

• Exchange vs. OTC Trading

• Understanding the generation stack

• Forward curves for electricity and CO2

• The Power Day Ahead Market

Exercise: Electricity Forward Curves

Day 3

Physical Electricity Trading Markets

• The different timeframes

• Day Ahead

o How to develop a bidding strategy for the power exchange

o How the portfolio can be managed

• Intraday

• Balancing

• Forwards

• Capacity

• Ancillary Services

Exercise: Spot Market: Producing a sample bid on the spot market for a generator

Electricity Trading and Risk Management

• Trading profit opportunities and risk sharing

• Hedging

• Risk management

o Cash flow, counterparty and commodity risk

• Optimisation

o Arbitrage

o Cross-regional optimisation

o Cross commodity optimisation

o Timing decisions

• Proprietary trading

• Trading gas, oil and other commodities to improve performance

• Trading electricity contracts: margin requirements, clearing, liquidity, information advantages.

Exercise: MGM Hedging disaster

Day 4

Electricity Forwards, Futures and Swaps: The Basics

• Forwards and futures

• Swaps

• Definitions

• Hedging with futures and forwards

• Hedging with swaps

Exercise: Electricity Forwards , Futures and Swaps

Basics of Electricity Options

• Calls and Puts

• Difference between buying and selling options

• Terminology

o Cap, floor

• Premium Reduction

o Collars

• Hedging applications

Spread Trading

• Different Spreads

• Spread trading strategies

• Clean Spark vs. Clean Dark Spreads

• Tolling Agreements

Final Exercise: Asset and Portfolio Trading