European Gas and Power Trading (CLASSROOM) – EGPT

Courses Syllabus

Course Summary

European Gas and Power trading is a three-day course presented by the energy training experts at Mennta Energy Solutions. This three-day, highly interactive, workshop is designed to provide an introductory overview of the way natural gas and electricity are traded within Europe. Delegates will learn the general principles of how gas and power markets work and how energy trading is carried out in the various different types of markets – spot and forward, exchange-based and OTC. They will also get an idea of what a trader’s job involves through competitive team trading simulations and other hands-on exercises that focus on different aspects of trading and risk management.
Topics explored include:

• Basic trading concepts
• Fundamentals of gas
• Power and emissions markets
• Market analysis
• Gas and power trading instruments
• Trading strategies including arbitrage and the use of gas storage
• Mechanics of trading on exchanges, in auctions and through bilateral contracts
• Principles of risk measurement, management and hedging

Who Should Attend?
The course is ideal for anyone who needs an introduction to energy trading and the role of trading within gas and power markets. Typical delegates would include support staff, analysts, accountants and managers in trading area, along with those involved with energy supply, risk management, credit, finance, contracts, IT, operations, transportation and storage. The course would also be suitable as an introductory foundation course for someone just starting out in a trading career, or making the transition to gas and power trading from other markets.

Course Content

Day One

Characteristics of gas and power markets

• What makes gas and power markets different from other commodities
• The importance of reliability and flexibility
• Short-term trading and price volatility

Market Liberalisation and Regulation

• Conventional and liberalised market structures
• The European energy market liberalisation programme
• Key concepts in market liberalisation

Basic trading concepts

• Reasons for gas, power and emissions trading
• Players in the physical gas and power markets, and their roles in traded markets
• Types of trader and trading activity
• Europe ‘s major gas and power suppliers and traders
• Key trading concepts and terminology

Day Two

Natural gas fundamentals

• Introduction to natural gas, its supply chain and end-user markets
• Natural gas quality issues
• Natural gas supply and demand trends
• Transportation infrastructure and developments
• The need for capacity and flexibility
• Gas storage

Power fundamentals

• Introduction to power generation technology
• Generation fuels and their characteristics
• The nature of end-user power markets
• Power generation capacity and consumption trends
• Load-following contracts
• Baseload and peak power
• Principles of economic dispatch

Gas and power market design

• Pools and bilateral market models
• Balancing and balancing systems
• Interactions between traders and infrastructure operators
• Gas and power market designs in Europe
• Access to transmission capacity
• Market coupling mechanisms
• Transmission pricing principles

Day Three

Gas and Power trading

• Long-term and short-term markets
• National and regional markets
• Trading hubs, zones and regions
• Spot and forward trading
• OTC and exchange trading
• Price drivers in gas and power markets

Trading Instruments

• Gas trading instruments
• Power trading instruments
• Calendars, standard contracts
• Physical and financial settlement
• Futures and exchange-traded options
• OTC swaps and options
• Spark spread trading
• Long-term gas contracts
• Retail energy supply contracts

Day Four

Emissions market fundamentals

• Principles of emissions control and trading
• International agreements and the Kyoto Protocol
• The European Emissions Trading Scheme
• Paricipants in emissions trading markets
• Trading activity, OTC and exchange markets
• Allowance pricing and price drivers

Storage and Flexibility

• The operational and trading roles of storage
• Physical flexibility in gas and electricity supply
• Forward curves, seasonality and the value of storage
• Intrinsic and extrinsic storage value
• Hedging a flexible power plant

Day Five

Mechanics of trading

• Bilateral negotiation
• OTC broker markets
• Screen-based trading
• Auction mechanisms

Risk and Risk Management

• Volume risk and price risk
• Sources of risk in energy trading
• Risk management goals and principles
• Measurement and quantification of risk (including VAR)
• Hedging goals and principles
• Derivatives markets and their uses
• Exchange traded and OTC instruments
• Hedging with futures, forwards and swaps
• Options-based hedging strategies (including collars)