Spring mid-semester module proposal
Topic: Perspectives on the Future of Energy
Lead instructor: Raymond Hill
Background: former CFO, Mirant Corp (independent power producer and energy trader) and CEO, Consolidated Electric Power Asia (independent power producer).
Dates: approximately February 28-March 10
Summary
The objective of this module is to introduce students to some major business issues related to the production and consumption of energy over the medium term future (the next decade or two). While alternative and renewable energy sources will be included in this introduction, the most of our time will be spent with companies whose businesses are representative of how the vast majority of the world’s energy is (and will be in the medium term future) produced and delivered. The module will begin in Atlanta and then travel to London and Paris. This international travel is expected to provide a variety of perspectives on the role of markets versus government intervention, on technological choices for the future and the relative priority of various energy issues.
Major topics:
· How should we think about the basic economics of various energy technologies? What are the comparative costs of technologies for electricity generation and how do they vary with the costs of fuel or emissions? How do government subsidies/taxes affect these costs? What are the economics of ethanol and other alternative fuels? What is an appropriate economic framework to evaluate attempts to deal with global warming?
· What is the future of nuclear power in the US? Why has the French experience with nuclear power been so successful and what lessons does it provide for the rest of the world?
· What is the scope for deregulation of electricity and natural gas markets? What role does energy trading play in these markets? How does the British model (a nationally integrated competitive electricity market) work and what can we learn from it after nearly 20 years of experience?
· How is Western Europe addressing the problem of energy security, particularly with respect to its dependence on Russia for natural gas?
· How do the major oil companies view the medium term future of oil? What is a realistic range of scenarios for world demand and supply for oil? What is the role of substitutes like shale oil and new natural gas discoveries in these scenarios?
Background work
Information sources: Energy Information Agency, International Energy Agency, EPRI
Modeling comparative costs of alternative technologies under varying input assumptions.
Natural gas and electricity de-regulation.
Markets for emissions allowances.
Stern report on global warming.
Evidence on demand elasticities.
Potential world oil supply.
Schedule
Atlanta Sometime during January/February
Southern Company. Topics: next generation of US nuclear plants.
Visit to energy trading floor (either Mirant or ICE—Intercontinental Energy Exchange).
Visit to plant Vogtle (one of the last nuclear plants constructed in the US) if this can be arranged on Saturday.
Travel to London weekend of Februrary 28/29
London Monday/Tuesday March 1/2
Meet with Ofgem (UK electricity and gas regulator). Topics: history of UK deregulation, performance based regulatory system.
Meet with UK electricity pool operator. (All electricity generating plants in the UK are centrally dispatched based on competitive half-hourly bids.)
If time: meet with BP, European Wind Energy Association.
Travel to Paris the evening of March 2 or morning of March 3.
Paris Wednesday/Thursday/Friday March 3/4/5
Gaz de France. Topic: European natural gas supply and distribution.
Electricité de France. Topic: France’s nuclear program.
Total. Topic: outlook for oil market and Total’s strategy.
International Energy Agency. This agency provides collects data and monitors policy across all aspects of energy for OECD countries. We will need to determine which topics we want to discuss with their staff.
Travel to Amsterdam over weekend of March 6-7
Amsterdam March 8-9
Meet with Shell, Dutch gas/electric distribution company (e.g., Nuon, Essent)
Return to Atlanta March 9