MSc in Oil & Gas and Offshore Engineering

Course Information Package

Course Unit TitleINTRODUCTION TO ENERGY ECONOMICS
Course Unit CodeMES502
Course Unit DetailsMSc Oil & Gas and Offshore Engineering (Elective Courses) -
Number of ECTS credits allocated7
Learning Outcomes of the course unitBy the end of the course, the students should be able to:
  1. Appraise alternative modes of energy supply, taking into account the challenges and the constraints of renewable and non renewable energy systems by appreciating the economic framework within which decisions are made.
  2. Develop and exhibit critical thinking in renewable energy systems design in a period of profound and rapid change of national and international energy markets driven by processes of privatisation and liberalisation
  3. Appraise energy systems project proposals by applying Present worth analysis; or Annual worth analysis; or Rate of return analysis.
  4. Apply methods of investigating project risk: risk adjusted discount rate, certainty equivalent, sensitivity, simulation and Monte Carlo analysis.
  5. Apply commercial software to model and develop an actual project’s cash flow reports and calculate NPV and IRR.
Mode of DeliveryFace-to-face
PrerequisitesNONECo-requisitesNONE
Recommended optional program componentsNONE
Course Contents PART A:
-  Enhanced knowledge on industry infrastructure, renewable energy technology performance, markets, cost chain, and trends (market orientation).
-  Analysis of current state of these technologies and market and their prospects for the future.
-  Factors such as technology drivers and challenges and the impact of incentives will be discussed, while barriers to the implementation of renewable energy and how to overcome them will be addressed.
-  The type of job opportunities available in the renewable energies industry and the skills required for these jobs are explored thoroughly.
 
PART B:
-  The course discusses issues that include energy systems’ economics analysis taking account financial and energy efficiency aspects in order to use energy systems and technologies in the most efficient way.
-  Methods of appraisal such as investment analysis (investments initial construction cost, operational and rejection cost), life cycle cost analysis and choice of technology as related to pay-back requirements are discussed.
-  Identification and estimation of cash flows, project appraisal formulae, and the application of net present value (NPV), internal rate of return (IRR) and other project evaluation criteria with a variety of examples.
-  Risk analysis is extensively covered by the use of risk adjusted discount rate, certainty equivalent, sensitivity, simulation and Monte Carlo analysis.
-  Resource constraints are introduced.

Recommended and/or required reading:
Textbooks
  • Murray Barrie, Power Markets and Economics: Energy Costs, Trading, Emissions, Wiley Publishers, ISBN: 978-0-470-77966-8, 2009.
  • Bhattacharyya, Subhes C., Energy Economics: Concepts, Issues, Markets and Governance, Springer Academic Publishers, ISBN 978-0-85729-267-4, 2011.
  • Conkling, Roger, L., Energy Pricing: Economics and Principles, Springer Academic Publishers, ISBN 978-3-642-15490-4, 2011.
  • Creating markets for energy technologies, International Energy Agency, Organisation for Economic Co-operation and Development, 2003
  • The Future for Renewable Energy 2, European Renewable Energy Council, James & James (Science Publishers) Ltd, 2002
  • Blank L., Tarquin, A., Engineering Economy, 7th Edition, McGraw-Hill, ISBN 978-0-07-337630-1, 2012.
  • Park, C.S., Fundamentals of Engineering Economics, 2nd Edition, Pearson Education, ISBN 978-0-13-135457-9, 2009.
  • Capital Budgeting: Financial Appraisal of Investment Projects, Don Dayananda , Richard Irons, Steve Harrison, John Herbohn, Patrick Rowland, Cambridge University Press, 2003
  • H. Campbell and R. Brown, Benefit-Cost Analysis: Financial and Economic Appraisal Using Spreadsheets, Cambridge University Press, 2003
References
  • Charging Ahead: The Business of Renewable Energy and What It Means for America John J. Berger
  • Renewable Energy in Europe - Building markets and capacity, European Renewable Energy Council, Earthscan, 2004
  • How to Sell Technical Equipment and Services, James Hutton, Pennwell Books, 2002
  • Power Plant Construction Management: A Survival Guide, Peter Hessler, Pennwell Books, 2005
  • Economic Analysis of Investment Operations, P. Belli, J.R. Anderson, H.N. Barnum, J.A. Dixon and Jee-Peng Tan, World Bank Institute, 2001
  • D. Potts, Project Planning and Analysis for Development, Lynne Reinner Publishers, 2002
Planned learning activities and teaching methods The taught part of course is delivered to the students by means of lectures, conducted with the help of computer presentations. Lecture notes and presentations are available through the web for students to use in combination with the textbooks.
Lectures are supplemented with coursework and laboratory work carried out on Microsoft Excel. During laboratory sessions, students learn Engineering Economy functions at Microsoft Excel and develop simple Project Cash flow applications to evaluate critical parameters such as Net Present Worth or Internal Rate of Return of a proposed engineering investment.
The course material (notes, exercises, forum, etc) is maintained on the university’s e-learning platform

Assessment methods and criteria
Coursework40%
Final Exam60%
Language of instructionEnglish
Work placement(s)NO