Customer Reviews

Energy Trading and Investing: Trading, Risk Management and Structuring Deals in the Energy Market

5 star:		(2)
4 star:		(3)
3 star:		(0)
2 star:		(1)
1 star:		(0)

 

 

Excellent book which describes how physical constraints significantly impact the trading of electricity and natural gas. It explains the physics behind pipelines and power systems in a fairly accessible way however I imagine it would be quite difficult for people who have never done physics. It introduces risk management and options in an easy to read fashion.

The only reason I gave it four stars is due to the incongruous 20 or so pages in the middle of the book in which the author gives us his significantly misinformed view on renewable energy. I hadn't heard this one before, but apparently wind energy's ability to limit oil imports is seriously offsetted by the need for lubricating oil in the wind turbine.

Two minutes on google tells me that a typical wind turbine (1.5MW) consumes about 100L of oil per year. That's about 1MWh of energy. A wind turbine has a typical capacity factor of 30% which means it would generate approximately 4000MWh of energy per year. Thus the energy used for the lubrication oil is 0.025% of the energy generated.

So my advice is to buy the book but skip chapters 4.5-4.8.

I'm not done reading this book, but so far it has been a fantastic introduction to the energy markets. Some of the material is repeated over and over, but it only helps reinforce the ideas. There are also some typos, but not to the point of being annoying. If you are looking for a great intro to the energy markets, including some of its physical characteristics (e.g., what it is, where it comes from, how its transported, how it's processed, and where it ends up), then this is the book for you. The author has substantial experience in the energy markets and he wrote this book as something he wishes he had read when he got started.

Pluses: a good introduction for a "non-commerical" person. Authors wisdom and experience are visible in clear and synthesised presentation. Minuses: the math is very simplistic. The technical explantations are simplistic or borderline wrong - clearly, the authour is does not have a technical background. A good reading, but, probalbly, would not keep it as a reference book.

This book has really left me baffled. The author is saying that "the number of deepwater drillships is on the decline" [because we're evidently running out of oil to drill for]. This statement is false because the number of deepwater drillships is actually growing (precisely because we're running out of oil and need to drill more). On the same page the author alludes to the idea that for the same reason global refinery capacity is not growing. While it is true in the US, he may want to check the data for the Middle East and India where rather massive capacity additions occurred in the last few years. Another reviewer here mentioned the author's misguided view on renewables. All this makes it really hard to trust anything else in the book. I would not recommend it.

Excellent overview of the energy markets. I am a lawyer in the energy business and wanted to better understand the business driving the legal issues. This is a great book for that. I don't think I am now equipped to trade successfully in these markets (perhaps if I was already a trader in other markets, this would give me enough infor about these specific markets) but I certainly better understand the business.

watch out for errors! It is a really useful book for somebody just getting into the energy industry. As a beginner, I was able to find a couple errors though, most profound is the Black-Scholes formula - it is copied incorrectly (formulas for d1 and N(x) in particular). Another error can be found on page 237, literally the last sentence. The lower a plant's heat rate the more efficient it is.
Other than that - a great read!