Energy Markets, Sustainability and Optimal Resource Utilization - 5EUS5IME

Goal(s)

This course unit offers a comprehensive introduction to the economic analysis of energy markets, sustainability challenges, and investment under uncertainty. It is designed for students interested in understanding how economic theory and quantitative methods can guide decisions in the energy and environmental sectors. The unit combines three complementary classes:
Module 1 Energy financial markets : introduces asset pricing, portfolio management, and trading strategies specific to energy markets, with practical applications.
Module 2 Energy Investments under Uncertainty : develops students' ability to apply dynamic optimization and real options theory to investment decisions.
Module 3 Consumption, Sustainability and Optimal Resource Utilization — provides a rigorous framework for analyzing the long-term use of natural resources in a sustainable manner, with a focus on intergenerational equity and ecological constraints.
Through this unit, students acquire tools to:
- Analyze and compare investment strategies
- Model decision-making under uncertainty
- Understand the structure and actors of energy markets
- Apply economic reasoning to resource management and sustainability
- Practice quantitative techniques with Excel and MATLAB

Content(s)

I.Energy Financial Markets (O. Ionescu)
This course introduces students to the fundamentals of finance applied to the energy sector. It explores the main actors, market mechanisms, and mathematical tools used in energy-related transactions by states and industrial players.
Learning outcomes:
- Understand core concepts and techniques in asset pricing and portfolio management
- Identify new market players and assess their roles in emerging energy market designs
- Compare and construct strategies for energy trading and risk management
- Apply methods through numerical simulations (Excel, MATLAB)
II. Energy Investments under Uncertainty (O. Ionescu)
This course introduces students to the theoretical foundations of dynamic optimization and explores the implications of real options theory in energy investment decision-making. Applications focus on problems in energy and environmental economics.
Learning outcomes:
- Review the classical Net Present Value (NPV) approach
- Model investment decision processes under uncertainty
- Compare different investment strategies to identify the optimal one
- Determine the optimal timing of investment and the associated option value
- Apply concepts through numerical simulations (Excel, MATLAB)

III. Consumption, Sustainability and Optimal Resource Utilization (Ani Guerdjikova)
This course aims to equip students with a theoretical and dynamic understanding of economic sustainability, focusing on the optimal use of natural resources. It addresses key issues such as renewable resource regeneration, consumption dynamics, ecological limits, and the intergenerational implications of economic choices. The goal is to train students to approach sustainability through a rigorous, quantitative, and analytical lens.

IV Inter-temporal optimization and some applications to resource economics (Giorgio Fabbri)
This course introduces the fundamental principles of intertemporal optimization and applies them to the economic analysis of natural resources and sustainability. Using tools such as dynamic programming and the Pontryagin maximum principle, students learn how to model economic decisions over time, taking into account resource scarcity and the need for optimal exploitation to support sustainable development.

Course Unit of Energy Economics (Semester 7)