AØKK08318U Seminar: Energy Economics

Volume 2018/2019

MSc programme in Economics

The seminar is primarily for students at the MSc of Economics



Energy is a vital component for any society. The access to cheap, clean, and secure energy is high on the agenda of any country and region. Thus, energy has received much notice from both politicians and from economists.


The energy market is heavily influenced by nature. On the supply side we have windmills that only produce when it is windy, and hydro plants that can only use the water available in the reservoirs. On the demand side, we use more energy in cold winters than in warm ones. As implied, the demand for energy is very seasonal. This leaves room for storage of energy (oil tanks, gas storages), financial price hedging, and possibly arbitration. Countries and regions prepare for extreme weather conditions and cold spells in dry years, as the unavailability of energy under these circumstances means casualties. However, this ‘insurance’ has the characteristics of a public good – so how do societies ensure that sufficient security of supply is provided?


Energy commodities on the exchange are as easy to trade as stocks and bonds, but not as easy to transport. Commodities have physical constraints that must be taken account of when priced in the financial market. The constraints include transportation capacity (e.g. tankers, gas pipelines), transportation time, political instability, storage capacity (gas storages, oil storages), transportation tariffs, production capacities and production fallouts. Thus, physical constraints like these will affect prices, trade, and availability.


Yet, these commodities are traded in vast volumes, globally. This leaves room for much financial analysis – a particular question of interest is how the market pricing corresponds to the monopolistic/oligopolistic domination of the supply of commodities. Further, energy has experience huge price fluctuations.


Looking at the supply side of energy, there are many examples of monopoly and oligopoly. The most obvious example is OPEC, which is a prime example of a cartel that dictates price. However the market power is not isolated to oil – there are only few major coal producers in the world, and Russian Gazprom has a huge influence on the European natural gas market. But even within Europe, large monopolies exists.


Energy is a topic very much influenced by politics – climate politics, trade politics, and even social politics in some countries. Topics of interest here include security of supply, ‘energy independence’, the market liberalization in EU of first the electricity and since the gas market, and finally how auctioning of capacity constrained infrastructure can be implemented.


Infrastructure is a key element when talking energy in a European perspective. Market integration as well as enhancement of the security of supply are key elements behind the European energy strategy, e.g. in that new infrastructure projects can obtain status as a ‘Project of Common Interest’ (PCI).


Finally, this seminar is on energy. In particular on issues related to power and natural gas. Although the relationship to environmental issues is close (emissions, CO2 quota, efficiency), environmental issues are not the aim of the seminar.


List of topics include (non-comprehensive):

  • Energy Policy and analysis hereof
  • Tariff on transportation of energy (power, gas)
  • Security of Supply – modeling the dependence on import of energy
  • Analysis of Levelized Cost of Electricity from different supply sources
  • Financial analysis of market prices, volatility and price responses to chocks
  • Sustainability and the extraction of natural resources
  • Cartels and monopoly theory
  • Cold winter, hot and dry summer? – impact on power prices in the winter
  • Geopolitics, international trade of energy commodities
  • Liberalization of energy- and gas markets
  • Privatization of state monopolies, including EU's Third Energy Package (ownership unbundling)
  • Hotelling’s rule and extraction of natural resources
  • Cross-border trade and taxation of goods
  • Energy as a means of social policy (i.e. subsidies)
  • Mechanism/auction design of capacity at constrained infrastructure connections


Please note, this seminar is NOT a seminar on environmental economics.

Learning Outcome

Additional for the learning outcome specified in the Curriculum , the students will acquire specific


  • related to energy economics. Knowledge could be related to the areas of energy infrastructure, energy tariffing, security of supply, energy mix, supply diversification, market development, and energy regulation.



  • to apply economic theory and econometric method to a specific and applied setting
  • to structure and present the analysis and results.



To be choosen in agreement with the supervisor.


BSc of Econonomics
It is recommended that the student have a basic knowledge of microeconomics and econometrics.
Kick-off meeting, research and writing process of the seminar project paper, presentation of own project, constructive feedback to another student´s project and actively participating in discussions at class.

The aim of the presentations is, that the student, who presents, uses the presentation as an opportunity to practice oral presentations skills and to receive feedback improving the seminar project.

It is strongly recommended that you start your search for a topic before the semester begins, as there is only a limited amount of weeks from the kick-off meeting to the first submission.

Before the presentations, your largely finished version of the seminar project paper must be uploaded in Absalon, as the opponents and the other seminar participants have to read and comment on the paper. It is important that you upload a nearly finished project due to the fact that the value of feedback and comments at the presentation is strongly associated with the skill of the seminar project paper.

After the presentations, you can make a light correction of the seminar project to include the feedback and comments emerged during the presentations. It is NOT intended that you rewrite or begin the writing of the full project AFTER the presentation has taken place.

The seminar project paper must be uploaded in the Digital Exam portal for assessment with in the deadline announced under Exam.

• Kick-off meeting: February 6, 2019: 10:15-13:00
• Deadline project description (commitment paper): March 1st, 2019.
• Deadline of pre-paper uploaded to Absalon : a week before the workshop
• Workshop of oral presentations: May 8, 2019: 9:00-17:00 (In case of two classes, an additional workshop on May 9, 2019: 09:00-17:00 should be reserved)

All information from the lecturer regarding the seminar is communicated through Absalon including venue.
  • Category
  • Hours
  • Project work
  • 186
  • Seminar
  • 20
  • Total
  • 206
7,5 ECTS
Type of assessment
Written examination
- a seminar paper in English that meets the formal requirements for written papers stated in the curriculum and at KUNet for seminars.
Exam registration requirements

Attendance in all  activities at the seminar as stated in the formal requrements in the Curriculum  and at the KUnet for Seminars (UK)  and  Seminars (DK)  is required to participate in the exam.


All aids allowed

for the project paper.

The supervisor defines the aids that must be used for the presentations.


Marking scale
7-point grading scale
Censorship form
External censorship
Exam period

Exam information:

Deadline for uploading the final seminar paper: June 3, 2019 before 10 AM


For enrolled students more information about examination, rules, exam schedule etc. is available at the intranet for Master (UK) and Master (DK ).



Reexam information:

The reexam is a written seminar paper as stated in the Curriculum.

Deadline and more information is available at Seminars (UK) and Seminars (DK).

More information about reexam etc is available at Master (UK)andMaster (DK).

Criteria for exam assesment

Students are assessed on the extent to which they master the learning outcome for the seminar and can make use of the knowledge, skills and competencies listed in the learning outcomes in the Curriculum of the Master programme.


To receive the top grade, the student must with no or only a few minor weaknesses be able to demonstrate an excellent performance displaying a high level of command of all aspects of the relevant material.