A short course on analysing the financial, technical, and environmental performance of energy projects.
The Energy Systems course centres on practical, hands-on, modelling exercises. Participants will make and develop their own spreadsheet models throughout the course, and will learn how to answer questions such as: is a proposed wind farm or gas turbine a good investment? What is the probability that it will earn a commercial rate of return? What is the best financing structure for the project?
No prior knowledge of finance theory is required. The course begins by defining financial principles such as balance sheets, profit and loss statements, debt, equity, return on capital, cash flows and rates of return. A diverse range of case studies into potential and real future energy investments are then analysed using spreadsheets, with no bias towards any particular energy technology. The analyses forecast investment returns in a probabilistic framework and evaluate the ‘value-of-risk’ by considering the effects of uncertainty in future prices and costs. Students work in groups to build the financial models, make the calculations, and prepare and deliver board-quality presentations on their findings to the course faculty. Finally, a novel way of analysing investments under uncertainty, ‘Real Options’, is introduced and a range of technologies are analysed using this approach.
Participation is open to University of Melbourne graduate students and staff of MEInetwork19 partners. The 2019 course has now finished.
- The fundamentals of finance
- The Levelised Cost of Energy (LCOE)
- Sensitivity analyses
- Tools for financial analysis under uncertainty
- Problem-based learning via investment case studies
Dr John Burgess is a chemical engineer with extensive experience in real investment decision-making in industry and has been the author of key reports on energy investments under uncertainty for the Australian Academies.