Published in November 2003 by
Risk Books
of Risk Waters Group, which organises Risk Conferences as well as publishes
the monthly Energy Risk (formerly known as Power Risk Management EPRM)
magazine of the energy trading and risk management community.
Buy at Amazon.co.uk 
Hardcover, 241 pages
8 chapters with illustrations and index
ISBN: 1 904339 11 5
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Risk and flexibility in electricity:
introduction to the fundamentals and techniques
Reviews and comments about the book - extracts from full book reviews.
More reviews at Risk
Books
This book makes a valuable contribution to thinking on the complexity
of the risk management process and if anyone in the industry, regulator
or government wished to sit down and spend a week doing some serious wide-ranging
thinking about the new reality of the risks producers, consumers and indeed
the economy of any country with a liberalised power market face, this
would be a very good place to start.
The meat of the book is a series of chapters covering topics as diverse
as fuel procurement, renewable generation, transmission services and retail
contracting. This provides an excellent mix and makes the book well worth
reading even for people who have been in the industry for a while. It
is all too easy to become balkanised in your own little sector of the
industry and therefore not understand the problems faced by your colleagues
down the hall. How many trading evangelists, for example, realize that
coal is not a uniform product and that fuel sourced from one mine may
be quite unsuitable for a power station designed to run on the output
from another?
This book undertook quite a challenge with this subject matter, but
has succeeded in producing a measured and readable account. At one point,
Jim Christian quotes a Chinese curse 'May you live in interesting times'.
They certainly may be, but this doesn't flinch once.
Dr. Anne Ku, an experienced energy researcher and journalist, has compiled
a timely book on the risk and flexibility in the electricity industry.
Although Dr. Ku was modest in stating that the book aims at comprehensibility
rather than comprehensiveness, it actually has addressed all major elements
of the value chain of electricity: from fuel, generation, forecasting,
delivery, to supplying the end-users.
On a subject very close to my heart, I found Chapter three "Analyzing
Risk & Return in the Physical Portfolio: A Non-Technical Overview" an
excellent primer on embedded optionality of energy assets. The author
successfully describes operating or contractual constraints of energy
assets, and their embedded optionality or flexibility, as two sides of
the same coin. The pitfalls of overly simplified methods of managing asset
flexibility (which might have led to many recent bankruptcies) are also
well represented in this chapter.
Soli Forouzan
President
Mind Span
All papers are practical and very accessible with few equations, so
that undergraduate students and professionals can take advantage of this
welcome addiction to electricity economics bookshelf. MBA and graduate
students also will learn with the diversity of topics covered by the book
and they will know valuable details from the electricity markets. The
book covers all electricity industry process: generation, transmission
and distribution/retailing. Among the topics analysed I highlight renewable
generation, energy portfolio, exotic options, deregulation, contracts,
and even organizational learning.
Risk and Flexibility in Electricity should be required reading for anyone
engaged in the electricity markets. This book is very easy to read and
understand the otherwise difficult concepts of the electricity markets
- even for those with little or no experience in the electricity markets.
The complex power beast is finally tamed in this comprehensive, well-arranged
volume. Each chapter is broken down into easily digestible components
combining thoughtful insight with objective analysis, suitable for novices
and energy veterans alike. This book is a must-read for decision makers
involved in any link in the electricity value chain.
Books dealing with the basic economics used to design power markets
are rare. Anne Ku's newest opus is therefore a welcome addition. Readers
will find an up-to-date introduction to this important field, covering
a wide range of topics, from engineering through trading to political
issues. Renewable energy is certainly ever growing in importance, while
power generation is no longer regarded as being "just available"
since recent blackouts in the USA and Europe. Price volatility developments
show that power markets are far from being in a mature state. Anne Ku's
book is very well suited to bring readers up to speed quickly and easily.
Dr. Jörg Spicker
Vorstand/Member of the Board
Atel Energie AG
Provides a sound foundation in both the basic and complex aspects of
finding and capturing opportunities while managing risk in the volatile
business of electricity trading and marketing.
This book has done a good job of collecting a useful array of related
topics important to the merchant energy business.
A must-read for all involved in the electricity markets. This book will
be useful for both novices and professionals who want a deeper understanding
of the pricing techniques involved in minimizing risk in the electricity
markets. Well done, Anne.
Ron Levi
Managing Director
GFI Group
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