Single-Course Engelsk 5 ECTS

Energy Economics

Overall Course Objectives

With the point of departure in economic theory, the purpose is to provide the students with a fundamental understanding of the current situation and the dynamic challenges that lie ahead for the energy sector, both nationally and internationally. This includes understanding energy economics, markets, politics, regulation and resources. The theoretical basis of the course is the economic theories relevant to those topics.
Furthermore, the students are expected to relate these elements to the term sustainability. The energy policy instruments will be compared in relation to different policy objectives and institutional settings in the energy sector. The students are expected to develop competences in interpreting, explaining, and discussing the challenges of the energy sector, as well as policy and regulation from an economic perspective.

See course description in Danish

Apply and critically evaluate microeconomic concepts (e.g., profit maximization, supply and demand, marginal cost pricing, and elasticities) in the context of energy markets.
Analyze and compare the structure and dynamics of international energy commodity markets (oil, gas, and coal), and assess their implications for energy security.
Evaluate and interpret key indicators of energy use (e.g., energy intensity) to compare countries’ energy systems and stages of economic development.
Quantitatively analyze energy demand and electricity load patterns, and assess their implications for system operation, investment decisions, and market outcomes.
Critically assess the economic rationale and outcomes of market liberalization, deregulation, and unbundling reforms in the energy sector.
Compare and evaluate regulatory frameworks for network industries, including cost recovery mechanisms and their effects on efficiency, investment incentives, and consumer welfare.
Analyze and synthesize the structure and function of electricity markets (e.g., wholesale, balancing, capacity markets) within the broader energy value chain.
Evaluate and model electricity pricing mechanisms (e.g., marginal pricing, pay-as-bid), including their impact on dispatch efficiency and market performance.
Analyse power markets based on load duration curves, cost recovery of power plants
Analyze and evaluate the relationship between investment decisions, generation capacity, and market design, including the role and effectiveness of capacity remuneration mechanisms.
Critically compare and assess environmental policy instruments (e.g., taxes, quotas, emissions trading systems such as EU ETS) in terms of efficiency, effectiveness, and distributional impacts.
Evaluate and design renewable energy support schemes (e.g., feed-in tariffs, auctions, green certificates) and assess their interaction with electricity markets and policy objectives.

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.