Three Day United States Energy Industry Seminar: Structured Energy/Power Transactions, Real Options, Retail Electricity Deals & How to Trade Around Energy Assets - Houston, Texas - December 6-8, 2023
This seminar is tailored for professionals in regulated and deregulated energy management, as well as those seeking a deeper understanding of the strategies, techniques, and tools employed by energy managers to structure and price profitable energy and power agreements, leverage energy and electric power assets, configure retail power transactions, and enhance profitability.
The program encompasses a broad spectrum of energy and power transactions and assets, illustrating fundamental principles applicable across the energy sector. It delves into potent energy and power structuring and asset trading methodologies, offering practical examples of their application to real-world energy deals and assets.
Additionally, the course delves into topics such as retail electricity pricing structures, RFP proposals, comprehensive requirements contract structures, challenges encountered by provider-of-last-resort entities, switching/migration risk, power purchase agreements, and more.
What sets this course apart is its unique approach, addressing both the deterministic intrinsic value and the concealed "insurance extrinsic value" associated with intricate agreement structures, energy assets, and various opportunities.
Who Should Attend:
This seminar is beneficial for a diverse audience, including energy and electric power executives, legal professionals, government regulators, trading specialists, marketing, sales, procurement, and risk management personnel, as well as accountants, auditors, plant operators, engineers, and corporate strategists.
Typical attendees represent various industries, including energy production and marketing, utilities, financial institutions, industrial enterprises, accounting, consulting, and law firms, municipal utilities, government regulatory bodies, and electric generation companies.
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!
Key Topics Covered:
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, etca€
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
Speakers:
Kenneth Skinner VP and Chief Operating Officer Integral Analytics
Kenneth 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.
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