The course is held in English
The educational program "Power trading " takes place online as an e-learning package being completed with a webinar that will settle the knowledge acquired individually. It includes various modules, study materials, exams and certification. Students who pass the exam can choose to be registered as a Chartered Professional on the Entrima charter.
The "Energy, Energy Markets and Trading" programs available on the Entrima’s e-learning platform are specially designed to expand students' knowledge and skills on electricity. The programs cover electricity production, electricity transmission and infrastructure, electricity supply and consumption, the organization of European energy markets, the role of market participants, the regulation of European electricity markets, the role of governments, tariff and tax setting, energy products and their prices, electricity trading, energy trading platforms, asset and portfolio management, asset-backed trading, power plant optimization, power trading strategies and trading-related processes such as settlement, billing, valuation positions.
Entrima was founded (2014) to provide a solution to market participants for the influx of regulation of capital and energy markets. Various regulatory packages require staff training; education is a mandatory part of the compliance framework. Interpretation of case studies requires specific knowledge of markets, products, prices and trading, as well as value chains of metals, agricultural products, oil, gas, coal and electricity. This means that examination and certification have become important and Entrima has started to offer a learning solution to market participants.
The webinar is aimed to people who
want to get detailed knowledge on power trading;
requires training in modern trading methods in order to develop the wholesale trading activity
The seminar participant benefits from modern interactive teaching methods, benefiting both from the access to a top e-learning platform in this field and from the presence of a lecturer with practical and theoretical experience..
Students who pass the exam can choose to be registered as a Chartered Professional at the Entrima charter
At the end of the program, in addition to the knowledge gained, students remain with access for few months to the interactive e-learning platform Entrima, being able to access any course in it.
Individual training programs carried out on the Entrima platform:
·Fundamentals of commodity markets pietei marfurilor (130 min, exam)
1. Asset classes – Types of markets
About fixed-income, equity, real estate, FX and commodities
Concerning risk-reward ratios and risk appetite
2. Commodities & commodity markets
About metals, softs & energy, but also freight, carbon & fibres
3. Production, storage, transport & consumption – Up-, mid- & downstream
Concerning various types of capacity
Including availability and utilization
4. Market participants & their role
About commodity trading firms & investors
Covering risk diversification
5. Spot & forward markets – Physical & financial products
Covering the concept of price volatility
Specifics concerning electricity & natural gas - Balancing
6. Commodity derivatives – Contract specifications & settlement
Physical delivery & cash settlement.
Delivery period & delivery moment
7. Pricing of commodities – Price driving factors
Fundamental & non-fundamental price driving factors
Price analysis, including seasonality & mean-reversion
8. Commodity markets vs. Financial markets
Differences and similarities between the characteristics
A comparison is made concerning markets, products & pricing
9. The role of speculators
About the impact of speculators on price levels
Concerning politicians, policy makers & regulation
·Fundamentals of energy trading (340 min, exam)
1. Liberalisation of the Energy Markets
What is aim of liberalisation? What are the consequences?
Risk and return; the risk-reward ratio; quantification vs. qualification.
3. Market risk
About price risk.
4. Risk management
Identification of risk, measuring risk and control of risk.
The concept volatility explained; calculation & interpretation of volatility figures.
6. Counterparty risk
Credit risk and delivery risk.
7. Credit risk management
Clearing; netting; credit limits; ratings; sleeving; systemic risk.
8. Liquidity & Liquidity risk
Market liquidity vs. funding liquidity.
9. The trading function
The role of trading business unit.
10. The trading organisation
Front, Middle & Back Office.
What is it and how is it organised?
12. Trading – The reasons for concluding transactions
About procurement, sales, balancing, hedging, arbitrage and speculation.
13. Pricing – The order book
How does trading take place? How are prices set? What orders are executed? When? How?
14. Trading – Order types
What order types are applied and for what reasons?
15. Trading process – Clearing
Central counterparty; clearing house & members; credit risk; margining & collateralisation.
16. Trading process – Settlement
Physical delivery versus cash settlement; settlement procedures.
17. Trading process – Transaction flow
Pre-trade, trade & post-trade processes; tasks & responsibilitis of front, mid & back office staff.
18. Trading process – ETRM system
Energy trading and risk management software; users and purposes.
19. Markets & Products – Spot vs. Forward markets
Spot/prompt vs. forward/futures markets.
20. Markets & Products – Derivatives
What are derivatives? What are they used for? And by whom?
21. Markets & Products – Forwards vs. Futures
What are the differences?
22. Markets & Products – Contract for difference
What is a CFD?
23. Markets & Products – Swaps
What is a swap?
24. Markets & Products – Options
What is a (call/put) option?
25. Trading platforms – OTC markets & trading
How is OTC trading organized? What are master agreements?
26. Trading platforms – Brokerage services
What is a broker? Inter-dealer brokers vs. broker-dealers.
27. Trading platforms – Exchange trading
What features does exchange trading have? How is it organized? Fee structure.
28. Trading platforms – Trading screens & platforms
What details are relevant to traders?
29. Pricing, price drivers & indexation
What factors drive prices? What is an index?
30. FX markets & trading
Exchange rates, Forex exposures; the role of the treasury department.
31. Accounting – Valuation
Bookkeeping & accounting rules; M-to-M.
32. Accounting – Book structure
How do firms organize internal transfers? What is a book structure? How is accounted for P/L?
33. Terminology – Upstream, midstream & downstream
Explanation of the terminology which is related to the value chain.
34. Terminology – Opening & Closing + Long & Short
What do the concepts of long or short imply? And opening or closing?
·Power trading – basic level (200 min, exam)
The power value chain
About electricity generation & consumption
Covering transmission in a nutshell
Power generation – Facilities & their characteristics
About power plants, efficiency, carbon intensity & ramping rates
Concerning cost of investment & maintenance and marginal cost
Gross processing margin – Spark & dark spread
About the margin of gas-fired and coal-fired power plants
Concerning dispatch, tolling cost and negative margins
Transmission – Cables, TSOs & balancing
About electricity transmission & congestion management
Concerning the role of TSOs and balancing regimes
Power pricing – The merit order
About supply & demand and the ranking of marginal cost levels
Concerning power consumption – Profiles & shaping
Power-specific products (15min.blocks; baseload; peak products)
Concerning the difference between spot and forward markets
Renewables – Impact on pricing
About wind & PV – Imbalances & shifts in the merit order
Concerning uncertainty with respect to production forecasts
Dispatch – Allocation of facilities, impact of weather & trading
Re the allocation of generation capacity and/or trading power
Concerning decision making processes at dispatch units
Market coupling – Cross-border transport capacity
About market coupling throughout Europe & its consequences
The optimal flow of power & trading for delivery the day ahead
10.Daily auctions – Price curves & matching
About pricing - supply and demand stacks at auctions
Concerning bidding strategies for generation capacity
·Power trading – intermediate level (150 min, exam)
Forward power markets
1. Power forward markets
Convering the differences between spot & forward markets.
About price volatility in spot & forward markets; mean reversion.
2. Power exchanges & brokers
About OTC markets and trading venues for power.
Concerning market liquidity, notional value and open interest.
Power term contracts
3. Power forwards & futures – The varieties
Concerning the most commonly known contracts.
The time-to-maturity and delivery moment/period.
4. Power forwards & futures – The application
Covering asset-backed trading as well as proprietary trading.
About managing power-related exposures.
5. Power forwards curves – Pricing of power forwards & futures
About contango & backwardation, including seasonality.
Covering the convenience yield.
Hedging of power exposures
6. Hedging power production & consumption capacity
About procurement & sales on a forward basis; contract mgt.
Covering assuring future cash flows by price fixation.
7. Hedging power transmission capacity
Locking in potential margins on a forward basis.
Covering location spreads; what these are & how to trade these.
Settlement of power term contracts
8. Settlement of power forwards & futures – Part 1
Including physical delivery & cash settlement.
Covering nomination & periodic invoicing.
9. Settlement of power forwards & futures – Part 2
Concerning the process of cascading.
Covering the consequences of it for the power portfolio
·Power trading – advanced level (170 min, finalizat cu examen)
Power portfolio management
1. Accounting – Book structure & internal transfers
About internal transactions & prices, including premiums.
Concerning book structures, cost allocation & P/L responsibility.
Covering upstream, midstream & downstream activities.
2. Customer portfolio
About power supply contracts; including load forecast.
Concerning circumstances, e.g. weather, economic situation.
3. Physical power assets
About make-or-buy decisions & asset-backed trading.
Aggregation of rights & obligations (prod., cons. & settlement).
Power derivatives & flexibility
4. Power swaps – Physical settlement
Concerning solutions for problem solving in the physical world.
About basis swaps, or location swaps.
5. Power swaps – Cash settlement
About financially-settled agreements, including indexation.
Concerning fixed-for floating contracts.
6. Power options – Outright options
About tradable contracts in the OTC markets & on exchange.
Pricing of power options; intrinsic value plus time value.
7. Power options – Application for hedging purposes
About hedging natural short/long positions with call/put options.
About power price caps & floors.
8. Power options – Embedded optionality
About volume flexibility & swing optionality in supply contracts.
Covering structuring and structured deals.
·Power trading – expert level (170 min, finalizat cu examen)
Power risk management
1. Power risk management – Value-at-risk of a power position
About the a commonly applied method to quantify an exposure.
Covering the relevant time horizon and confidence level.
2. Power risk management – Risk off-set due to correlation
About statistical data and concepts, and how to apply these.
Concerning pairs or proxies.
3. Power risk management – Value-at-risk of a power portfolio
About the quantification of aggregated power positions.
Considerig opposing long/short positions & correlated positions.
4. Power risk management – Off-setting risk (opposing exposures)
About risk off-setting and netting.
Covering portfolio integration and cross-margining.
5. Modelling – The real option approach
About production capacity & transmission capacity.
About management decisions, such as the right to dispatch.
6. Modelling – Physical power assets as real options
Considering power generation cap. & power transmission cables.
About call options on the spark/dark spread or location spread.
7. Modelling – Complexity: Valuation & hedging of spread options
About structuring, including exotic options.
Including spread option valuation models, e.g. Margrabe.
8. Modelling – Optimizing the hedges
About hedging strategies, e.g. proxy-hedging.
Concerning dynamic risk management; Delta-hedging.
9. Modelling – Weather elements (precipitation & wind data)
About the impact of renewables on the power markets.
Hydro: Precipitation, cascading, pump storage.
Wind: Concerning temperature, location, direction, wind roses, diurnal cycle,
pressure gradient force, coriolis force, friction.
A recap of the online courses that have been followed to embed the materials in a solid manner
Flexibility in power portfolios
Optionality in contractual power assets and in physical power assets.
How to monetise/capitalise this flexibility/optionality
How to manage this flexibility/optionality