Energy Trading

What it is about

You learn the value chain of energy trading: from market structures through trading venues to products for electricity, gas and additionally coal, crude oil and emission allowances. In the end you will understand how energy markets work, be able to assess risks, design trading portfolios and hedging strategies, and analyze price and clearing mechanisms.

What you will be able to do

• Name important energy exchanges and their products
• Explain how energy markets work and the role of energy trading
• Compare concepts of risk management
• Select organizational and process concepts for energy trading
• Assess the order book (mid-prices, spreads)
• Evaluate financial products and calculate clearing prices
• Design hedging requirements and portfolios
• Explain market price developments
• Apply order-book mechanics and programming in exercises
• Calculate and mark hedging with derivatives
• Build and interpret forwards curve
• Calculate essential risk measures (VaR, CVaR)
• Calculate marginal costs of electricity generation and CO2 effects
• Apply mathematical optimization to determine the best generation mix

What the module consists of

• VorlesungConveying fundamentals, theoretical concepts and practical examples; discussions for deeper understanding
• ÜbungApplication of theory to exercises and case studies; interactive problem sheets solved in groups
• ExkursionInsight into practice by visiting the trading floor of the Munich municipal utilities

Teaching method

• Vorlesungto introduce fundamentals and concepts
• Seminar discussionsfor critical engagement and deepening
• Integrated problem-sheet exercisesfor practical application and development of problem-solving skills (group work, spreadsheet use)
• Exkursionto convey practical insights into trading