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Risk Management & Finance

<p class="font_8">"Introduction to various renewable energy markets and legislation, with a focus on solar and wind </p>
<ul class="font_8">
<li><p class="font_8">Key renewable markets overview</p></li>
<li><p class="font_8">Renewable capacity and investment for various countries</p></li>
<li><p class="font_8">Examples: Applicable legislative frameworks in key markets" </p></li>
</ul>
<p class="font_8">"Overview of renewable incentive systems and their suitability for renewable energy finance</p>
<ul class="font_8">
<li><p class="font_8">Types of renewable incentives</p></li>
<li><p class="font_8">Advantages and disadvantages of the incentives from a financing point of view </p></li>
<li><p class="font_8">Examples: Markets where various renewable incentives apply</p></li>
</ul>
<p class="font_8">Overview of renewable technologies from a commercial perspective</p>
<ul class="font_8">
<li><p class="font_8">Commercially relevant renewable technologies</p></li>
<li><p class="font_8">Cost comparison of major renewable technologies based on capacity investment and lifecycle cost</p></li>
<li><p class="font_8">Development of investment over time, cost deflation of renewables </p></li>
<li><p class="font_8">Examples: ‘Non-standard’ project examples for higher returns </p></li>
</ul>
<p class="font_8">Risk appraisal for renewable energy project appraisal</p>
<ul class="font_8">
<li><p class="font_8">Country and Financial Risks </p></li>
<li><p class="font_8">Policy and Regulatory Risk </p></li>
<li><p class="font_8">Technical and Project Specific Risk </p></li>
<li><p class="font_8">Market Risk Renewable energy project modelling </p></li>
<li><p class="font_8">Basic financial metrics: NPV, payback, IRR and mIRR, cost of capital, ROI </p></li>
<li><p class="font_8">Lifecycle Cost and Levelized Cost of Energy </p></li>
<li><p class="font_8">Scenario analysis </p></li>
<li><p class="font_8">Example: Solar project cash-flow analysis </p></li>
<li><p class="font_8">Example: Wind farm development assessment based on various financial metrics </p></li>
<li><p class="font_8">Multi-criteria project selection </p></li>
<li><p class="font_8">Example: Wind site selection </p></li>
</ul>
<p class="font_8">Basic energy financing structures / vehicles </p>
<ul class="font_8">
<li><p class="font_8">On-balance-sheet vs. off-balance-sheet financing</p></li>
<li><p class="font_8">Structuring typical renewable energy projects from a financial perspective </p></li>
<li><p class="font_8">Risk transfer and risk bearing in a typical project structure </p></li>
<li><p class="font_8">Equity, debt instruments and grants </p></li>
<li><p class="font_8">Tax structuring </p></li>
<li><p class="font_8">Examples: Project structuring Practical financing tools</p></li>
<li><p class="font_8">Performance contracting </p></li>
<li><p class="font_8">Renewable power purchase agreements </p></li>
<li><p class="font_8">EPC and O&M agreements</p></li>
<li><p class="font_8">Other operational agreements </p></li>
<li><p class="font_8">Example: Performance contract </p></li>
</ul>
<p class="font_8">Renewable energy finance sources </p>
<ul class="font_8">
<li><p class="font_8">Stages of renewable financing and their returns </p></li>
<li><p class="font_8">Stakeholders in a typical financing structure </p></li>
<li><p class="font_8">Financers and their appetite for risk </p></li>
<li><p class="font_8">Project Developers </p></li>
<li><p class="font_8">Banks and insurers</p></li>
<li><p class="font_8">Private Equity </p></li>
<li><p class="font_8">Insurance and other institutional investors </p></li>
<li><p class="font_8">Other financiers </p></li>
<li><p class="font_8">Example: Key corporate procurers of renewable energy </p></li>
</ul>
<p class="font_8">Raising the capital for energy project finance </p>
<ul class="font_8">
<li><p class="font_8">Project finance stages and applicable types of (debt) finance </p></li>
<li><p class="font_8">Debt sizing rules </p></li>
<li><p class="font_8">Revenue distribution and typical project revenue ‘waterfall’ </p></li>
<li><p class="font_8">Covenants, remedies and closing conditions </p></li>
<li><p class="font_8">Completing financing with a bank, including Bank Credit Committee</p></li>
</ul>

Renewable Energy Project Finance

Training Course

"How energy products are purchased and traded • Overview of electricity, gas, LNG, oil and coal markets
• Trade flows, stakeholders, market structure overviews, trading tool examples"
"The causes and magnitude of risks in energy markets • The risk universe: Identifying market, credit and other market-related risks
• Risks that are managed in wholesale markets"
Designing a risk management program top-down
•         Corporate strategy
•         Corporate policies and organizational setup
•         Operating unit/company level policies
•         Functional separation
•         Board involvement
•         Desk level limits and procedures
•         Trading risk management and capital allocation

Modelling and quantifying market, credit, liquidity risk
•         VaR Modelling for market risk in electricity, gas and oil
•         Associated concepts for market risk: PaR, cVaR, stress testing
•         CreditVaR modelling for credit risk
•         Correlations between market and credit risks
•         Modelling liquidity risk
•         Converting one risk into another

Putting a price on risk
•         Holistic risk pricing for market, credit and liquidity risks, with a walk-through for each
•         Putting parameters into the models

Trading and managing market risk
•         Market risk activities for a physical energy company
•         Market risk strategies
•         Trade examples for each activity
•         Hedging and hedge ratio calculation
•         Market risk controls in practice
•         Risk transfers in a typical utility

Credit risk management
•         Credit risk activities for a physical energy company
•         Trade and management examples
•         Credit risk mitigants
•         Master agreement introduction
•         Credit risk controls in practice

Liquidity risk management
•         Liquidity risk activities for a physical energy company
•         Mitigation, management and trade examples
•         Liquidity risk controls in practice

Operational risk control
•         Operational risk overview and examples
•         Operational risk controls in practice

Use of options, particularly to manage physical optionality
•         Physical optionality
•         Trade examples
•         Option pricing and greeks
•         Delta-hedging

Operational readiness for managing risk with exchange-traded instruments
•         Operations of an exchange
•         Cleared trade flow
•         Margining for exchange traded instruments
•         Checklist for setting up to trade exchange-traded instruments
•         Compensation structures in risk management

Hedge accounting
•         Introduction to hedge accounting in the context of energy risk hedging
•         IAS 39 and IRFS 9 requirements

Energy Risk Trading, Risk Measurement and Risk Control

Training Course

"Overview of physical and financial power markets • Overview of various electricity markets: Nordpool (Northern Europe), EPEX/EEX (Western Europe), GCCIA (Gulf), NEMS/SGX (Singapore), NZEM (New Zealand), KPX (Korea) in terms of history, physical and financial volume
• Characteristics of market structures
• Stakeholders in the markets: TSO, market operator, clearing house, members, utilities, independent retailers
• Case study: Volume growth and product development in the small derivative market of New Zealand"
"Regulatory intentions of creating a futures market • The ‘social value’ of an electricity forward curve
• Lower entry barriers for generators
• Support for independent retailers and downstream competition
• Direct purchasing for large electricity users
• Case study: Regulatory considerations in the case of the Western European and the Singaporean electricity derivatives markets"
Successful product design depending on a given physical market
•         Physical market characteristics that influence derivative design, like intra-day price swings and seasonal price patterns
•         Various electricity derivative types
•         Designing derivative products for an underlying physical market
•         Considerations of tenor and cascading
•         Mapping line constraints and regional pricing to product design
•         Which customer types need what kind of products
•         Settlement process for derivatives: Margining, daily settlement price (with particular focus on the peculiarities of electricity, what works and what doesn’t work), final settlement price, settlement for options based products
•         Case study: Product development in Nordpool (Northern Europe) and NZEM (New Zealand)

Risk management in utilities using derivatives
•         Management of physical risks with available financial derivatives
•         Organizational setup of a utility’s risk management functions
•         Risk transfer within a utility
•         Introduction to hedge accounting
•         Case study: Organization and risk transfer within a European utility

Market making for futures, and incentives for market making
•         Role of a market maker
•         Who can be a market maker
•         Risks and risk management in market making
•         Options to incentivize market makers
•         Regulatory options to foster liquidity in futures
•         Case study: Market making on EEX and SGX

Information disclosure for futures markets
•         How is market power exercised in electricity markets, and what mitigants are available
•         What information disclosure is critical for non-physical market participants to trust a futures market and actively trade it
•         The trade-off between usefulness of a futures market for physical market participants, and extensive disclosure to give financial market participants comfort in the market
•         Introduction to REMIT as an example
•         Case study: Voluntary transparency initiative by Western Europe utilities

Market surveillance for futures market
•         Physical and financial market regulation – differences and requirements
•         Surveillance for financial power markets, with ACER as an example
•         Information sharing between physical and financial oversight bodies
•         Case study: Surveillance and information sharing between financial and physical markets in Singapore

Electricity Futures Markets

Training course

"Introduction to the electricity industry • Basic electric applications
• Key electric terms and laws
• Commercial electric systems and their key features
• Exercise: Zonal pricing
• Example: Singapore"
"Electricity market liberalization • Electricity economics
• Steps from a fully regulated to a fully liberalized market
• Design parameters for electricity markets
• Why regulation is still needed, and how it changes, with liberalization
• Designing a physical market for robustness and fairness
• Examples: Examples: Singapore, New Zealand"
Inner workings of a liberalized physical electricity market in the case of NEMS
•         Stakeholders
•         Trading in the physical market
•         Ancillary services
•         Examples: Singapore

Pricing and dispatch
•         Energy – merit order, linear optimization and nodal pricing
•         Reserve
•         Regulation
•         Co-optimization
•         Load profiles and their commercial attractiveness
•         Overview of international power markets
•         Exercise: Assessing load attractiveness
•         Exercise: Simple nodal pricing examples
•         Exercise: Simple co-optimization example

Market settlement
•         Market settlement process
•         Invoicing
•         Dispute resolution
•         Credit risk, default procedures and collateral

Advanced market features and challenges on the demand side
•         Retail competition
•         Renewable generation
•         Demand-side bidding
•         Flexibility from interruptible load, demand response, electric vehicles, storage etc.
•         Micro grid
•         Smart grid
•         Examples: Singapore, Germany, Belgium, Australia

How Physical Electricity Markets work with a focus on the NEMS

Training Course

"What is PE and VC all about? • Advantages of private ownership for holdings
• Advantages for the manager
• Reasons why energy companies might engage in PE and VC"
"Market overview energy sector PE and VC • Why PE and VC for the energy sector is special
• Players in the space
• Risk and returns in Private Equity"
"Structure of a PE/VC fund • Typical fund setup/structure
• Portfolio diversification by strategy
• Relationship to fund holdings
• Applying leverage"

How a PE or VC fund creates value
•         Alpha
•         Strategies to create alpha
•         PE/VC deal life cycle
•         Deal management and staff assignment

PE and VC deal examples
•         Examples for various value creation strategies
•         Assessment of the deal examples

PE and VC fund economics
•         Economics of investments by value creation strategy
•         How the fund gets paid

Originating deals in PE and VC
•         Origination techniques
•         Examples
•         Sources for ideas

Role of talent
•         Why talent management is key
•         Type of talent needed and where to find it
•         Compensation structures and mechanisms, differentiation by hierarchy level
•         Compensation benchmarks

Deal evaluation and pitch
•         Deal summary and pitch
•         Quantitative analyses
•         Qualitative information
•         Deal selection process

Deal exits
•         Importance of the exit strategy
•         Considerations of when to exit
•         Exit options

Risk control in PE and VC
•         Risk controls depend on value creation strategy
•         Typical risk control arrangements for a fund

Role of support in VC
•         Key support areas
•         Arms-length support conducive to fund success

Embedding a VC/PE fund into a corporate environment
•         Management and funding
•         Risk control and support
•         Incentives
•         Hiring and HR topics

Starting and raising money for a PE or VC fund
•         Capital requirements
•         Possible seed capital sources
•         Second stage sources of capitalight engage in PE and VC

Private Equity and Venture Capital in the Energy Sector

Training Course

"Introduction to energy markets • Structure of electricity and gas markets
• Stakeholders in electricity and gas markets
• Energy price formation
• Energy price behavior"
Holistic energy risk management and hedging
•         Various risks in energy risk management
•         Measuring and pricing energy risks
•         Available hedging instruments
•         Hedging strategies and their benefits, depending on industry
•         Decision and approval processes
•         Benchmarking
•         Reporting

Contract basics
•         Measuring consumption
•         Contract structures and master contracts
•         Volume flexibility

Purchasing approaches
•         Tendering
•         Physical vs financial purchasing
•         Splitting large loads
•         Cooperation with other buyers
•         In-house energy risk management
•         VPPs and long-term energy purchasing contracts
•         Third party portfolio management
•         Bespoke versus standardized contracting

Organizing tenders
•         Considerations for a tender
•         Project setup
•         Common pitfalls

Advanced purchasing
•         Including own generation into the purchasing strategy
•         Including demand response into the purchasing strategy
•         Third party financing of own generation

Green purchasing
•         Options to purchase green electricity and gas
•         Calculating environmental impact and footprint
•         Other options to reduce environmental impact from an energy point of view

Hedge accounting for energy risk
•         Introduction to IAS 39
•         Introduction to IFRS 9
•         Margining considerations

Electricity and gas Purchasing for Industrial & Commercial Customers

Training Course

Renewable Corporate PPA

Training Course

"Introduction • The Project Value chain
• Structure and Financing Project
• Project vs. Balance sheet financing
• Role Environmental attributes
• CAPEX and OPEX
• Role renewable regulations
• Role subsidies
• Role storage, energy efficiency, demand side response"
"Project Risk Management • Risk Management Organization
• Risk Management Process
• Risk Assessment
• Financial risk metric(s)
o IRR"
"Business Case Risk • Electricity Price Risk
o Low wholesale prices (short and long term)
o Negative electricity prices
o Curtialment
o Profiling risk (cannibalization)
o Inflation Risk
o High financing costs"
·       Imbalance costs developments (short and long term)
o   Development of energy mix
·       Volume Risk
o   Lack of trading capabilities
o   Volume risk related to energy yield
·       Additional financing and revenue risks
o   Financing Risk
o   Credit Risk
Mitigation Strategies Financial Yield
·       Internal and external sales strategy
o   Pricing period
o   Market Access contract
o   Corporate PPAs
o   Financial strength offtaker
o   Guarantee system
·       Financing Strategy
o   Debt Finance
o   Variable interest rate hedging
Risks Construction Phase
·       HSE (Health & safety and Environment Risk)
·       Supply risk for crucial components
o   Non-availability or delayed delivery of suitable generation facilities and/or crucial components
o   Significant increase of the commodity and fuel costs
·       Transportation and installation risk
·       Stakeholder management and third parties
·       Damage to wildlife and/or environment
Mitigation Strategies Construction Risks
·       Design and Procurement Strategy
o   Site specific design solutions
o   Transport and installation strategy
o   Different work packages
o   Hedging price risk raw materials and fuels
o   Supply chain management expertise
o   Project specific contracts
·       Security of Supply Strategy
o   Reservations
Risks Operations Phase
·       HSE
·       Activities
o   Limited access to qualified workers
o   Low availability
o   Availability of equipment
·       Energy Yield
o   Lower short and long term average wind speed
o   Annual variations wind and impact on liquidity
o   High amount of curtailments
·       Functioning of the technology
o   Scheduled maintenance and availability
o   Lower energy conversion
o   Technical failures
o   Uncertainty O&M costs
o   External risk events
Mitigation Strategies Operation Risks
·       O&M strategy
o   Sourcing: own vs. contracted capacity
o   Access: logistics concept
o   Human resource: ensuring enough qualified workers
·       Optimization accessibility and availability
o   Design
o   Choice of Logistics
·       Financial Management
o   Monitoring operating margins and financial buffers
o   Sensitivities
o   Suppliers’ guarantees
o   Insurance policies

Offshore Wind Risk Management

Training Course

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