MAS504 Energy Economics

Contents and structure

The course has three parts:

1. Energy economics, theory and methods
2. Economic analysis of investments and efficiency
3. Economic policy

The course gives an introduction to energy economics and policy. Important issues are how energy relates to sustainable development and climate change, the energy transition, energy market failure, analysis of energy investments, various topics on energy efficiency, different approaches to energy policy and policy evaluation.

In the course, we will review the current energy situation in the world and consider the three pillars of sustainable development; environmental, economic, and social. Key questions are how to use renewable and non-renewable energy resources, how to evaluate energy investments from private and societal perspectives, and how energy policy can support sustainable development goals.

To analyse energy saving or production projects, we will study budgeting of cash flows, capital costs, discounting, calculation of net present value and the internal rate of return, levelized cost of energy, cost-benefit analysis, and regulatory tools such as taxes, subsidies, permit trading systems, and energy standards.

The course is suitable for undergraduate students in economics and students in engineering or environmental sciences with interest in energy economics. The course requires no prior knowledge of economics or economic analysis. Technical aspects of energy resources, production, and power plants will not be covered in detail.

Learning Outcome

Candidates completing the course will have the following knowledge, skills, and general competences.

Knowledge

The student…

• is familiar with sustainable development and its pillars, and the role of energy in development and climate issues.
• knows economic concepts including market failures, energy demand, cost of capital, discounting, and levelized cost of energy.
• has basic knowledge of investment and financial theory.
• understand how sustainable development and the goal of a circular economy relates to energy investment decisions.

Skills

The student…

• can calculate commercial and societal profitability of energy investments.
• can analyse, calculate and perform simulations to investigate investment risks.
• can reflect on costs and benefits of energy investments.
• can reflect on sustainable development issues related to different energy sources and discuss regulations and policy measures that can stimulate a sustainable energy mix.

General competences

The student…

• can explain and present results of analysis and evaluations both orally and in writing.
• can explain different economic systems and the role of energy in societal development.

Entry requirements

None

Recommended previous knowledge

None

Teaching methods

Lectures, assignments, discussion sessions.

Compulsory learning activities

Three approved assignments.

Assessment

Digital school exam, 4 hours.

Students must bring their own computer with spreadsheet software. The software required to complete the exam must be installed and tested prior to the examination date.

Grading scale is A-F, where F is fail.

Examination support material

None

More about examination support material