This seminar is designed for regulated and deregulated energy managers, structuring professionals, and anyone else who wants to gain a better understanding of the concepts, methods, and tools energy managers use to structure and price profitable energy/power agreements; how to monetize energy & electric power assets; structure retail power transactions; and increase profits.
This program covers a wide range of energy and power transactions and assets illustrating common principles used across the energy industry. Many powerful energy/power structuring and asset trading techniques are explored, with examples of how these techniques can be applied to many real-world energy transactions and assets.
This course also addresses retail electricity pricing structures, RFP proposals, full requirements contract structures, the issues faced by providers of last resort, switching/migration risk, power purchase agreements and a number of other topics. This course is unique in that it addresses both the deterministic intrinsic value and the hidden "insurance extrinsic value" associated with complex agreement structures, energy assets and other opportunities.
A laptop is required with any version of Excel.
What You Will Learn
- Financial engineering and stochastic methods and the statistics of structuring
- The economics of electric power generation and how to make money trading between next-day vs. real-time electricity prices.
- How to trade around, hedge, and monetize natural gas, petroleum and electric power storage, processing, and transmission assets.
- Surprisingly effective natural gas structured transactions that lock in profits and value.
- How and why many energy/power market participants "leave money on the table" by undervaluing energy options.
- How to calculate risk in structured energy products.
- How to increase asset value and build the business case for electric batteries, renewables and other distributed energy resources.
- The Intrinsic and Extrinsic "Option Value" of energy & electric power assets
- How to trade around storage, transportation, btu and electric generation assets.
- How to structure cross-commodity structured transactions.
- Real Options, Insurance Value and Trading Around a Hedged Asset.
- The structure of forward tolling, and reverse tolling arrangements -- and what to watch out for
- The statistics of energy transactions, and how to value opportunities and manage risk.
- How structured financial transactions can mimic physical energy and electric power assets.
- How to structure retail energy supply obligations and community choice aggregation deals.
- And much more!
Course Content
DAY 1: FOUNDATIONS OF STRUCTURING
- Continental Breakfast opens at 7:45am
8:00 AM DERIVATIVES REVIEW
- Swaps, Futures, Options, etc.
- Structured Contracts - What they are and how they differ from plain vanilla derivatives
- Deal Capture and Compliance issues with derivatives and structured transactions
- Regulatory Issues, ISDA, EEI, FAS133, Dodd Frank
- Financing needed for these kinds of transactions - Margining, Counterparty credit, etc
9:30 AM FINANCIAL ENGINEERING AND STOCHASTIC METHODS
- Statistics of Structuring
- Closed Form and Numeric Pricing Models, Black Scholes, Monte Carlo, Binomial Trees
- Volatility and Forecasting
- General Stochastic Price Models
10:30 FUNDAMENTALS OF HEDGING
- The Greeks
- Delta Hedge, Dynamic Hedge, Gamma Hedge
- Fundamental Charting - Payoff Diagrams and Portfolio VaR
1:00 PM RISK IN STRUCTURED PRODUCTS
- Risk Analytics and Strategy Tools
- Calculating Component Risk, Volatility, Correlation and Portfolio Value
- Measuring Risk in Transactions and Extreme Value Risk
- VaR - How it's Calculated and Generalized to Strategy Models
- Risk Adjusted Return on Capital (RAROC) and other Efficiency Frontier Concepts
2:30 PM REAL OPTIONS AND INSURANCE VALUE EXAMPLE
- Tolling Contracts
- The structure of forward tolling, and reverse tolling arrangements -- and what to watch out for
- A review of an actual tolling-type agreement "term sheet"
- How tolling arrangements can be used to buy coal and sell natural gas by "wire".
CLASS ENDS 4:00 p.m.
DAY 2: OVERVIEW OF STRUCTURED TRANSACTIONS
- Continental Breakfast opens at 7:45 a.m.
8:00 AM OVERVIEW OF STRUCTURED TRANSACTIONS
- Heat Rates and How they are Hedged
- Converting Coal, Oil and Natural Gas to Equivalent Electric Power Prices
- Spark Spreads and Market Implied Heat Rates, Spot and Forward Spark Spreads
- The Basics of Spread Trading using a Spark Spread
9:00 AM STRUCTURING STORAGE, TRANSPORTATION AND COMMODITY SPREADS
- Time Spreads (Storage)
- Locational Spreads (Transportation)
- BTU Commodity Spreads (Generation)
10:30 AM STRUCTURING RENEWABLE, ENERGY EFFICIENCY AND OTHER DISTRIBUTED ENERGY RESOURCES
- Building the Business Case for Electricity Storage - An example of optionality
- Renewable Portfolio Standards and Wind Energy and Photovoltaic
- Cost-Effectiveness Calculations of Energy Efficiency
1:00 PM STRUCTURED NATURAL GAS AND PETROLEUM TRANSACTIONS
- Hedging Firm Transportation
- Selling Physical Swing Options to End-Users
- Trading Physical in One Location Priced at Index for Another Location
- Buying Index with a Floor from a Seller
- Paying a Premium Over Market and Making a Profit
- Selling at a Discount to Market and Making a Profit
1:30 PM RETAIL ELECTRIC STRUCTURING
- Power Purchase Agreements
- The role of aggregators, Community Choice Aggregators and Micro-Grids
- Rate Design, Fixed and Variable Costs, Adders
- Contractual Issues
- Mitigating Risks to Value
- Different power products/structures (7x8, 2x16)
2:30 PM INTERMITTENT RENEWABLE/DEFAULT SERVICE/PROVIDER OF LAST RESORT/FULL REQUIREMENTS
- Pricing the RFP
- Wholesale Portfolios and Bidding
- Managing Intermittent Renewable Risk
- Managing Switching/Migration Risk
- Managing "Full Requirement" Load Shape Risk
CLASS ENDS 4:00 p.m.
DAY 3: STRUCTURED POWER GENERATION TRANSACTIONS
- Continental Breakfast opens at 7:45 a.m.
8:00 AM THE ECONOMICS OF POWER GENERATION
- Term Trading and Load Obligation
- Intra-Month Balancing
- Next-day, Real-Time Balancing, Scheduling and Settlements
- Hedging & Monetizing Generation Assets
- Intrinsic and Extrinsic Valuation of Electric Generation Assets
9:30 AM FINANCIAL CONTRACTS THAT MIMIC PHYSICAL ASSETS
- Cross Commodity Energy Swaps
- Spark Spread Options
- Heat Rate Call Options
- Heat Rate Linked Power Contacts
10:30 AM POWER GENERATOR OPTIONALITY
- Owning a physical generation asset;
- Owning a Spark Spread Call Option;
- Owning a Heat Rate Call Option;
- Controlling a generating asset through a tolling arrangement; or
- Using a heat-rate-linked power transaction
CLASS ENDS AT NOON
Course Provider
Mr Kenneth Skinner,
VP and Chief Operating Officer ,
Integral AnalyticsKenneth Skinner, Ph.D. is Vice President of Risk & Evaluation Products for Integral Analytics, an analytical software and management consulting firm focused on operational, planning, and market research solutions. Dr. Skinner has over 20 years’ experience in evaluation and risk measurement, having worked as an energy consultant with PHB Hagler Bailly and Financial Times (FT) Energy, and as the Derivative Structuring Manager for the retail energy supplier Sempra Energy Solutions. He has his Ph.D. from Colorado School of Mines, in Mineral Economics, with an emphasis in Operations Research, an MBA from Regis University and his BS in Engineering from Letourneau University.
Dr. Skinner is a nationally recognized expert in economic evaluation and modeling of energy assets including energy storage, distribution and generation, efficiency and demand response, renewable energy alternatives, financial derivatives and structured contracts using net present value, econometric and statistical methods, optimization principles, and real option valuation techniques. Dr. Skinner is currently the technology columnist for Wiley Natural Gas and Electricity Journal and is a noted speaker on energy related topics for organizations such as AESP, IAEE, ACEEE, PLMA, IEPEC, INFORMS, Infocast, EUCI, SNL Energy and PGS Energy Training.
Who Should Attend
Among those who will benefit from this seminar include energy and electric power executives; attorneys; government regulators; traders & trading support staff; marketing, sales, purchasing & risk management personnel; accountants & auditors; plant operators; engineers; and corporate planners. Types of companies that typically attend this program include energy producers and marketers; utilities; banks & financial houses; industrial companies; accounting, consulting & law firms; municipal utilities; government regulators and electric generators.
Location
ADDRESS
Courtyard Marriott Houston by the Galleria
2900 Sage Road
Houston
TX 77056
United States
