Essentials of Power Trading Training Course

This intensive programme is structured in such a way that a perfect synergy between theory and practice will be achieved. From experience we know that we get the best results when the participants are actively involved. All the topics will be explained in-depth with the use of practical examples and graphics. The theory will be put into practice with the use of several real-life case studies. A thorough training of your key employees
will allow your company to become active in trading on the markets for electricity and the fuels to generate electricity in any phase of development.

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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

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. 

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