An overview of today's energy markets from a multi-commodity perspective As global warming takes center stage in the public and private sectors, new debates on the future of energy markets and electricity generation have emerged around the world. The Second Edition of Managing Energy Risk has been updated to reflect the latest products, approaches, and energy market evolution. A full 30% of the content accounts for changes that have occurred since the publication of the first edition. Practitioners will appreciate this contemporary approach to energy and the comprehensive information on recent market influences. A new chapter is devoted to the growing importance of renewable energy sources, related subsidy schemes and their impact on energy markets. Carbon emissions certificates, post-Fukushima market shifts, and improvements in renewable energy generation are all included. Further, due to the unprecedented growth in shale gas production in recent years, a significant amount of material on gas markets has been added in this edition. Managing Energy Risk is now a complete guide to both gas and electricity markets, and gas-specific models like gas storage and swing contracts are given their due. The unique, practical approach to energy trading includes a comprehensive explanation of the interactions and relations between all energy commodities. Thoroughly revised to reflect recent changes in renewable energy, impacts of the financial crisis, and market fluctuations in the wake of Fukushima Emphasizes both electricity and gas, with all-new gas valuation models and a thorough description of the gas market Written by a team of authors with theoretical and practical expertise, blending mathematical finance and technical optimization Covers developments in the European Union Emissions Trading Scheme, as well as coal, oil, natural gas, and renewables The latest developments in gas and power markets have demonstrated the growing importance of energy risk management for utility companies and energy intensive industry. By combining energy economics models and financial engineering, Managing Energy Risk delivers a balanced perspective that captures the nuances in the exciting world of energy.

An overview of today's energy markets from a multi-commodityperspectiveAs global warming takes center stage in the public and privatesectors, new debates on the future of energy markets andelectricity generation have emerged around the world. The SecondEdition of Managing Energy Risk has been updated to reflectthe latest products, approaches, and energy market evolution. Afull 30% of the content accounts for changes that have occurredsince the publication of the first edition. Practitioners willappreciate this contemporary approach to energy and thecomprehensive information on recent market influences.A new chapter is devoted to the growing importance of renewableenergy sources, related subsidy schemes and their impact on energymarkets. Carbon emissions certificates, post-Fukushima marketshifts, and improvements in renewable energy generation are allincluded.Further, due to the unprecedented growth in shale gas productionin recent years, a significant amount of material on gas marketshas been added in this edition. Managing Energy Risk is nowa complete guide to both gas and electricity markets, andgas-specific models like gas storage and swing contracts are giventheir due.The unique, practical approach to energy trading includes acomprehensive explanation of the interactions and relations betweenall energy commodities.* Thoroughly revised to reflect recent changes in renewableenergy, impacts of the financial crisis, and market fluctuations inthe wake of Fukushima* Emphasizes both electricity and gas, with all-new gas valuationmodels and a thorough description of the gas market* Written by a team of authors with theoretical and practicalexpertise, blending mathematical finance and technicaloptimization* Covers developments in the European Union Emissions TradingScheme, as well as coal, oil, natural gas, and renewablesThe latest developments in gas and power markets havedemonstrated the growing importance of energy risk management forutility companies and energy intensive industry. By combiningenergy economics models and financial engineering, ManagingEnergy Risk delivers a balanced perspective that captures thenuances in the exciting world of energy.

1 Energy Markets 71.1 Energy Trading 91.2 The Oil Market 141.3 The Natural Gas Market 201.4 The Coal Market 291.5 The Electricity Market 351.6 The Emissions Market 532 Renewable Energy 692.1 The Role of Renewable Energy in Electricity Generation 702.2 The Role of Liquid Biofuels in the Transportation Sector 752.3 Renewable Energy Technologies 772.4 Support Schemes for Renewable Energy 962.5 Key Economic Factors of Renewable Energy Projects 1082.6 Risks in Renewable Energy Projects and their Mitigation 1103 Risk Management 1253.1 Governance Principles and Market Regulation 1263.2 Market Risk 1283.3 Legal Risk 1563.4 Credit Risk 1603.5 Liquidity Risk 1723.6 Operational Risk 1754 Retail Markets 1794.1 Interaction of Wholesale and Retail Markets 1794.2 Retail Products 1834.3 Sourcing 1894.4 Load Forecasting 1924.5 Weather Risk in Gas Retail Markets 1944.6 Risk Premiums 2015 Energy Derivatives 2155.1 Forwards, Futures and Swaps 2165.2 Commodity Forward Curves 2235.3 "Plain Vanilla" Options 2285.4 American, Bermudan and Asian Options 2435.5 Multi-Underlying Options 2475.6 Modelling Spot Prices 2555.7 Stochastic Forward Curve Models 2776 Stochastic Models for Electricity and Gas 2836.1 Daily and Hourly Forward Curve Models 2836.2 Structural Electricity Price Models 2956.3 Structural Gas Price Models 3127 Fundamental Market Models 3337.1 Fundamental Price Drivers in Electricity Markets 3337.2 Economic Power Plant Dispatch 3477.3 Methodological Approaches 3727.4 Relevant System Information for Electricity Market Modelling 4067.5 Application of Electricity Market Models 4137.6 Gas Market Models 4167.7 Market Models for Oil, Coal, and CO2 Markets 4297.8 Asset Investment Decisions 430Appendix 437A Mathematical Background 439A.1 Econometric Methods 439A.2 Stochastic Processes 448A.3 Option Pricing Theory 451