Essentials of Power Trading

A highly practical guide to the mechanics of trading in the power market.

Course Highlights

The primary course objectives are to create a better understanding of:

The developments and major issues in power and fuel markets in Europe
The European power market platforms
The drivers and dynamics of power prices
The different instruments that are being traded
Trading and hedging strategies of power derivatives and assets

For details of the course trainer, please download the course brochure

Booking Information

Dates	Prices	Book This Course	Discount
13 - 14 Sep 2010	£ 1899		-
07 - 08 Apr 2011	£ 1899		-

Course Programme

Day One

Introduction to European Power Markets

Current status and future developments
Organisation of the European power markets
Main regulatory issues in Europe
Main features in power important to trading

Cross Border Capacity

Explicit vs implicit auctions
Market coupling vs. market splitting
What markets are coupled
Benefits market coupling

Power and Carbon Markets

Current and future status in carbon markets
Carbon Trading
Drivers in carbon markets
Impact of carbon prices on power prices
Role of hedging strategies in power producers

Power Markets: Physical and Financial Trading

Spot and forward trading of power
Understanding the generation stack
Operating decisions of a power plant
Efficiency curves and heat rates
Forward curves for power and CO2
Impact of renewable targets on market structure

European Power Exchanges

Nordpool
APXEndex
EPEX
EEX derivatives
N2EX
Others

Group Discussion: Latest developments and future outlook

Players in the Trading Markets

Producers
End-users
Traders
Brokers
Financial Institutions

Understanding Power Prices

Non-storability
Seasonality
Volatility, spikes
Mean reversion
Price drivers:
- Suppy and demand
- Weather and others

Spot Trading

Spot market models
How to develop a bidding strategy for the power pool
How the portfolio can be managed
Practical examples from the perspective of a supply company and from that of a generator

Case Study: Spot market - producing a sample bid on the spot market for a generator

Day Two

Trading

The role of trading: profit opportunities and risk sharing

The different strategies:
– Hedging
– Arbitrage
– Speculation

Trading gas, oil and other commodities to improve performance

Trading power contracts:
– Margin requirements
– Clearing
– Liquidity
– Information advantages
Hedging with futures and forwards
Hedging with swaps

The features of Derivatives

What are derivatives?
History
Derivatives: good or bad?

Forwards, Futures and Swaps: Understanding the Basics

Forwards and Futures
Swaps
Definitions
Hedging with futures and forwards
Hedging with swaps

Case Study: Metallgeslschaft

Basics of Options

Calls and puts
Difference between buying and selling options
Terminology
Cap, floor
Premium reduction:
- collars
- 3 way options
Hedging applications

Spread Trading

Different spreads
Spread trading strategies
Spark and dark spread:
- Theoretical and real one
Tolling agreements
- Physical vs virtual

Power Retail Products

Interaction wholesale and retail markets
Retail products
- Full service contracts
- Indexed contracts
Risk Premium
Potential procurements strategies

Case Study: Energy procurement

Risk Management

Risk vs Return
10 golden risk management rules
Main Power Risks:
- Market risk
- Volume risk
- Credit risk
- Operational risk

Hedging and Trading from a Utilities Perspective

How to manage risk and trade along the value chain
Customers increasingly expect flexibility
Trading at utilities level
Relationship trading-retail-marketing
Trading products

Case Study: Delegates will be divided in groups of 4-5 people and all groups will be given a business scenario of a utility. They will be asked to identify the risks, the cash flows and the possible hedging strategy for that utility.