Energy Finance and Economics: Analysis and Valuation, Risk Management, and the Future of Energy.

• Author: Roncoroni, Andrea

Energy Finance and Economics: Analysis and Valuation, Risk Management, and the Future of Energy edited by BETTY SIMKINS and RUSSELL SIMKINS. (Wiley: Kolb Series in Finance, Essential Perspectives, 2013), 624 pages, ISBN: 978-1-118-01712-8. Hardcover.

This volume offers an excellent treatment of corporate finance and economics applied to conventional and renewable energy markets.

Content development is organized into parts, each gathering chapters sharing a common theme, an exception being the last part reporting a number of case-studies across a variety of subjects. Each chapter provides the reader with either a self-contained introductory presentation of the state-of-the-art in a subject of interest or a case-study analyzing a concrete market example. A few chapters contain a useful Q&A section. Readers will particularly appreciate the effort made by the editors to gather a wide variety of topics into a well-shaped and homogeneous framework.

Part I deals with a thorough description of the economics of energy markets. It begins with an overview of past and current market structures, including analyses of cartels, NOC's, geopolitical issues, as well as demand and supply characteristics. It then moves on to analyzing alternative views about market evolution, passing through a description of conventional energy downstream segments and an illustration of asset valuation models for renewable energy sources. Also discussed is energy sustainability in conjunction with related economic, environmental, and social implications. This part of the book is broad and encompasses most of the relevant dimensions of standing and forward-looking dynamics of energy markets.

Part II illustrates a number of applied techniques in corporate financial analysis for the energy industry. A strand of items deals with accounting principles and methods in the upstream segment of several energy markets. Next is a treatment of financial statements, ratio analysis, and cash reserve assessment, in addition to a few case-studies. A major axis of development focuses on real asset valuation, a subject dealt with from two alternative perspectives: one is a variation of the traditional DCF analysis devised to keep track of risk exposure (via scoring assessment) and inflation bias; the other is an operational introduction to the real-option valuation method, which the authors illustrate in considerable depth. Energy-related tax systems are then illustrated across world markets in...