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FE406 Energy Economy

Course description for academic year 2022/2023

Contents and structure

The course consists of fundamental cost theory and investment theory. Examples will mainly be obtained from renewable energy production. The course will give an introduction to the factors which affect the cash flows of renewable energy projects. Focus will be on application of investment theory on concrete projects.   

Learning Outcome


The student should

  • have knowledge on how uncertainty affect investor's risk and how such risk should be included in an investment analysis
  • be able to use this knowledge to develop good tools that can assist investment decisions in concrete cases 


The student should

  • for a given technology, be able to identify what cash flows the project will generate across its lifetime
  • for a given technology, be able to identify how uncertain conditions (market, technology, policy, natural resources) will influence these cash flows


The student should

  • have knowledge on the most used analytical tools for assessing the profitability and risk of renewable-electricity investment projects
  • have overview of factors, including policy, technology and natural resources, that influence the cash flows of such projects
  • be able to assess whether to invest in such projects given uncertainty in the factors mentioned above
  • understand how the economic characteristics of a power plant are influenced by its source of renewable energy

Entry requirements


Recommended previous knowledge

MA415 and FE405

Teaching methods

Lectures, assignments and exercises.

Compulsory learning activities

Three (3) group (1-3 students) written assignments which contain the practical application of the course's theory on concrete renewable energy projects. Three of three assignments must be approved (passed) before one may take the exam.  


Written group based project assignment with groups of 1-3 students.

Grading scale A-F, where F represents a fail.

Examination support material


More about examination support material