78456 - Economics And Management of Energy Utilities M

Learning outcomes

The course provides the basics for understanding the regulation of public utilities, the design of electricity markets and the guiding principles of business management for the energy sector. At the end of the course students are able to understand the main challenges of infrastructural and power investments, and can engage them both in public perspective of regulation and competition policy of utilities and in the enterprise perspective of capital budgeting. Futhermore students are finally able to identify key management issues of engineering, procurement, construction and operation phases of industrial projects, and can deal with them applying project and process management techniques.

Course contents

The course introduces the most relevant economic theories and empirical perspectives, from microeconomics to macroeconomics and regulatory economy fundamentals. Public policies and regulation such as competition policy, natural monopolies, renewable energy support, environmental policies and energy efficiency measures are analysed throughout the course. Economics of energy resources and markets, focusing on Oil&Gas, commodity markets, grids and networks, traditional power and renewable energy are discussed focusing on major industry trends and dynamics.

After an extensive overview of the market context, management and other business-related tools will be provided from project management to capital budgeting to assess energy investment projects.

The course is divided in four modules:

1. Introductory topics and basics of macroeconomics and resource economy
   • Fundamental Concept of Energy
   • Energy supply and the economics of exhaustible resources
   • Introduction to theory of the firm and market structures
2. Energy and power regulation
   • Introduction to regulatory economics
   • European energy regulation: a single market for gas and electricity
   • Wholesale power markets: competition and antitrust issues
   • The Energy Transition: promoting green economy 
   • Green Deal and Loz/Zero Carbon Economy to slow down climate changes
3. Energy markets, industries and energy resources
   • Global energy trends: Oil&Gas markets, energy security and peak oil
   • Geopolitics and energy
   • The electricity sector: power plants, networks and technologies
   • The Boom od Renewable energies 
   • Energy efficiency technologies
4. Management of energy companies and investment projects

• Introduction to capital budgeting and corporate finance
• Economic and financial aspects of generation technologies
• LCOE – Levelized Cost of Energy
• Risk Management concepts
• Project Management fundamentals

Readings/Bibliography

No assigned textbook for the course.

Lectures will be supported by power point presentations.

Lecture notes will be available at the web site https://iol.unibo.it/ and on MS Teams Classroom repository.

Suggested bibliography:

• Pearce D W, Turner R K, Economics of Natural Resources and the Environment, Johns Hopkins Univ Pr (December 1989)
• Kirschen D, Strbac G, Fundamentals of Power System Economics, John Wiley & Sons, (2004)
• Stoft S, Power System Economics: Designing Markets for Electricity, Wiley, (2002)

Suggested research readings:

• IEA - International Energy Agency, World Energy Outlook 2022, and in general all IEA free publications (https://www.iea.org/reports/world-energy-outlook-2022)
• IRENA - World Energy Transitions Outlook: 1.5°C Pathway [https://irena.org/-/media/Files/IRENA/Agency/Publication/2021/Jun/IRENA_World_Energy_Transitions_Outlook_2021.pdf], and other relevant IRENA free publications (https://irena.org/publications/2021/Jun/World-Energy-Transitions-Outlook)
• BNEF - Bloomberg New Energy Finance, 2022 Energy Transition Investment Trends report, and in general all BNEF free publications [https://about.bnef.com/clean-energy-investment/ ]
• Mckinsey Sustainability, The net-zero transition: What it would cost, what it could bring, [https://www.mckinsey.com/business-functions/sustainability/our-insights/the-net-zero-transition-what-it-would-cost-what-it-could-bring]
• BP, Energy Outlook 2022,  [https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/energy-outlook/bp-energy-outlook-2022.pdf]
  

Teaching methods

• Live Class lectures;
• Case studies and excel laboratories;
• Meetings/Workshops with energy experts, business managers and corporate directors

Assessment methods

Final exam consisting of both a Written test and an Oral one.

(60% Weight) Written Test: i) 1/2 exercise; ii) Up to 5 open questions (answer ~ 150 words), iii) Up to 20 multiple choice questions

(30% Weight) Oral Test: consists of no. 3 questions/exercises regarding the relevant topics

(10% Weight) Regular attendance (no. presence), proactive discussion and committed participation to the lectures 

 

Teaching tools

MS power point presentations

MS Excel model to perform LCOE and Investment Valuation Labs

Videos 

Office hours

See the website of Giuseppe Mastropieri