Utility Workshops CenterFull Course Description
KS401
Real-Option Valuation of Energy Assets and Structured Contracts
Using the proper analysis technique can have a serious bottom line impact when valuing a large multi-million dollar asset. This one-day program is designed to provide an understanding of the various approaches used to value energy and electricity assets as real options. Increase your firm's profits with proven practical techniques for: 1) hourly, daily, and forward electric, gas and oil price strategies; 2) determining optimal spark spread boundaries; injection and withdraw storage schedules and transport loading 3) measuring the hidden value in uncertainty and optionality.

Seminar Highlights:
•    The pros and cons of net present value (NPV), decision analysis (DA), and real options (RO) valuation techniques.
•    Understand the deficiencies of marginal cost valuation, and learn how to develop a real-options approach based on
      forward price simulation of fuel and energy markets.
•    The most common financial pricing models including start-to-finish development of the GBM and Mean Reversion
      (Jump Diffusion) models which will be defined, regressed, and simulated.
•    The relationship between financial options and real options, and the three methods of valuing options – Black
      Scholes, binomial trees, and Monte Carlo simulation.
•    How Black Scholes, binomial trees, and Monte Carlo simulation method are applied to value natural gas storage,
      electric generation, and energy portfolio assets.
•    The role of volatility, portfolio considerations, and risk management implications to asset pricing and valuation.
•    How to value generation assets using real option competitive price analysis.