2025 (Current Year) Special graduate degree programs Specially Offered Degree Programs for Graduate Students Tokyo Tech Academy of Energy and Informatics program
Finance and Data Analysis in Energy Markets
- Academic unit or major
- Tokyo Tech Academy of Energy and Informatics program
- Instructor(s)
- Kazuhiko Ohashi / Yohei Yamamoto
- Class Format
- Lecture
- Media-enhanced courses
- -
- Day of week/Period
(Classrooms) - Class
- -
- Course Code
- ENI.H402
- Number of credits
- 100
- Course offered
- 2025
- Offered quarter
- 3Q
- Syllabus updated
- Mar 19, 2025
- Language
- English
Syllabus
Course overview and goals
This course covers finance (by Ohashi) and data analysis (by Yamamoto) in energy markets. More precisely, in the former, we study the basics of finance and economics necessary for understanding the structure of energy - especially electricity - markets, the characteristics and models of prices and demand, and the use of derivatives for risk management. In the latter, we study the methods of data analysis for market prices and demand volumes, which is necessary for quantitative analysis, along with analytical examples, including kinked demand curve, seasonal variations, effects of global energy prices on Japanese electricity market and risk premium in electricity futures.
With the liberalization of electricity market, the managerial decisions by power companies on electricity generation and transaction are now based on market prices. In this context, changes in the power supply mix due to the increase in renewable energy generation and the shift away from coal due to decarbonization, as well as the development of demand management technologies such as demand response, are significantly changing the characteristics of electricity prices and supply/demand. Knowledge and technology to quantitatively assess electricity prices and supply/demand, and to identify and manage risks, are needed more than ever in management related to electricity markets. This lecture aims to provide the basic knowledge of finance, economics, and data analysis used for this purpose.
Course description and aims
This course is designed to help students to acquire the following skills:
1) Explain the structure of electricity market and the risks that the suppliers and demanders face.
2) Explain the characteristics of price and demand of electricity, the factors that determine them, and the relation with other energy prices.
3) Explain the valuation and management of risks and the use of derivatives.
4) Conduct data analysis such as prediction and causal inference using electricity market data.
Keywords
electricity price, demand, risk, derivatives, data analysis
Competencies
- Specialist skills
- Intercultural skills
- Communication skills
- Critical thinking skills
- Practical and/or problem-solving skills
Class flow
Students will gain an understanding of the workings of the electricity market, the challenges faced by market participants, and how they utilize knowledge of finance, economics, and data analysis to solve those challenges, moving back and forth between social issues and academic methods to find solutions. Note that we may have a session with an external speaker from the energy industry.
Course schedule/Objectives
| Course schedule | Objectives | |
|---|---|---|
| Class 1 | (Ohashi) Structure of electricity market and risks faced by electricity suppliers and demanders | Understand the economic role of price fluctuation and risks faced by suppliers and demanders. |
| Class 2 | (Yamamoto) Software basics; Linear regressions and their applications to Japanese electricity market data; Kinked demand curve | Get able to use causal regression analysis using package software R and to make inference on causality in Japanese electricity market data. |
| Class 3 | (Ohashi) Characteristics of electricity prices and demand, determinants, and relation with other energy prices | Understand the characteristics and determinants of fluctuations in electricity prices and demand, and their relationship with others. |
| Class 4 | (Yamamoto) Effects of temperature variations on electricity markets; Effects of global energy prices on Japanese electricity markets | Get able to incorporate seasonal nonlinear variations in linear regression model. Get able to use basic time-series models to evaluate dynamic impacts of global energy prices on Japanese electricity market. |
| Class 5 | (Ohashi) Evaluation and management of risks related to electricity price and demand, and how to use derivatives | Understand how to evaluate and manage risk and use derivatives. |
| Class 6 | (Yamamoto) Forward premium in Japanese electricity futures | Get able to compute and interpret risk premium based on a forecasting model by using data from Japanese electricity futures market. |
| Class 7 | Summary and Q&A |
Study advice (preparation and review)
To enhance effective learning, students are encouraged to spend approximately 100 minutes preparing for class and another 100 minutes reviewing class content afterwards (including assignments) for each class.
They should do so by referring to textbooks and other course material.
Textbook(s)
Lecture materials will be shared through the learning system.
Reference books, course materials, etc.
Reference books will be introduced in the lecture as appropriate due to the wide range of topics.
Evaluation methods and criteria
Grade is based on a 5 page report in which a student both perform a data analysis about the electricity market, and selects a topic related to the electricity market, discusses the significance of the issue, and draws conclusion based on data analysis.
Related courses
- ENI.H401 ： Marketing for Value Creation
- ENI.H403 ： Economic Development and Energy Policies
- TAL.S502 ： Professionals and Value Creation A
- TAL.S503 ： Professionals and Value Creation B
- ENI.A602 ： InfoSyEnergy Product-service design
- ENI.A603 ： InfoSyEnergy Policy-making workshop
Prerequisites
Basic knowledge of microeconomics, statistical inference (estimation and hypothesis testing), and software (R) is desirable.