Energy Economics

• Explain and apply basic concepts of economic theory such as profit maximization, demand and supply
• Distinguish the main characteristics of international fuel markets (mainly oil, gas and coal)
• Describe the indicators to compare country energy intensities and developments.
• Analyse energy demand and electricity load patterns and how they affect energy systems
• Understand the logic behind market opening and deregulation in the energy industry
• Explain the main differences between regulatory methods for network cost recovery
• Understand which power markets exist and their role in the energy value chain
• Understand pricing mechanisms on power markets
• Analyse power markets based on load duration curves, cost recovery of power plants
• Describe the relation between investments and generation capacity, as well as the effects produced by capacity remunerations mechanisms.
• Explain the difference between taxes, quotas and EU-ETS for depollution
• Understand different support mechanisms for renewable energy and analyse their interaction with energy markets

This course takes the approach of microeconomics to analyze the energy sector, how energy markets behave and the necessary regulation of markets.
The course provides a general introduction to the energy sector both at the national and the international level. The main focus will be on energy supply and demand, price formation with deep dives into different types of energy markets (electricity spot markets, CO2 certificate emissions, etc.) and energy policy. It also encompasses market design, market interactions, and potential market imperfections. These subjects will be analyzed and discussed under consideration of environmental taxes and regulation. We discuss policy measures to address these aspects under different conditions.
Textbook chapters, as well as scientific papers and articles dealing with the respective subject, will be introduced and discussed.

The course applies an equality policy with no discrimination of gender, age, religious beliefs or disabilities.

01005/42009, Basic knowledge of microeconomics, power market theory, and energy market liberalisation is a plus.

For students that have no previous experience regarding microeconomic theory, it is highly recommended to read Gregory Mankiw “Principles of Microeconomics”, Chapters 6–10.

The energy economics course consists of a 4-hour weekly schedule, with 2 hours allocated to lectures in the auditorium and another 2 hours dedicated to exercises and group work. Additionally, students should anticipate further engagement beyond the designated course hours.

Teaching activities and content are organised for students admitted to the MSc in Engineering (Sustainable Energy)