Mining and Minerals Engineering

CSM3369 - Economic Resource Assessment and Appraisal (2012)

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MODULE TITLEEconomic Resource Assessment and Appraisal CREDIT VALUE10
MODULE CODECSM3369 MODULE CONVENERDr Adam Feldman (Coordinator)
DURATION: TERM 1 2 3
DURATION: WEEKS 2
Number of Students Taking Module (anticipated) 47
DESCRIPTION - summary of the module content

This is a pragmatic module. It is designed for those who plan to work within or alongside the renewable energy industry. It will be useful to anyone charged with responsibility to develop or institute new renewable energy projects, whether large or small. 

The module examines how to assess the macro-feasibility of a renewable energy project, how it may be financed and how to model its potential economic success.

Pre-requisite requirement:

  • General understanding of the 7 varieties of renewable energy resource and the main technologies used to harvest and deploy them.
  • Generic understanding of energy markets, energy politics, policy, legislation, environmental impact and project management.

Co-requisite requirement:

  • More detailed and specific knowledge of any one or more of the above areas is advantageous.

Required pre-requisite modules and useful co-requisite modules are detailed in the final section of this document.

This is a pragmatic module. It is designed for those who plan to work within or alongside the renewable energy industry. It will be useful to anyone charged with responsibility to develop or institute new renewable energy projects, whether large or small. 

The module examines how to assess the macro-feasibility of a renewable energy project, how it may be financed and how to model its potential economic success.

Pre-requisite requirement:

  • General understanding of the 7 varieties of renewable energy resource and the main technologies used to harvest and deploy them.
  • Generic understanding of energy markets, energy politics, policy, legislation, environmental impact and project management.

Co-requisite requirement:

  • More detailed and specific knowledge of any one or more of the above areas is advantageous.

Required pre-requisite modules and useful co-requisite modules are detailed in the final section of this document.

AIMS - intentions of the module

The module aims to develop understanding as to how the global energy industry can be considered as a unique investment opportunity. Mastering the topic will allow sensible and successful development of renewable energy ventures.

The module’s ultimate purpose is to develop a pragmatic approach to using knowledge acquired in each of the pre-requisite and co-requisite modules as detailed above.

INTENDED LEARNING OUTCOMES (ILOs) (see assessment section below for how ILOs will be assessed)

On successful completion of this module you should be able to demonstrate:

Module Specific Skills and Knowledge:

1.In-depth understanding of political, resource and market forces affecting the energy sector generally and ability to apply these into a renewable energy context.

2.Capability to assimilate data and other information of varying quality to form objective assessment of the energy market and drawing meaningful inferences and conclusions about these markets.

3.Detailed knowledge and understanding of how and why the cost of renewable energy technologies and generating with those technologies decreases over time.

4.Understanding of methods for assessing the potential for various renewable energy technologies and applying these effectively.

5.Detailed understanding of the underlying microeconomics of investment decisions and an ability to put these into a renewable energy context.

6.Appreciation of factors affecting the economics of individual renewable energy developments, and an ability to apply this understanding to practical cases.

7.Detailed understanding that the interface between technical and economic aspects of the discipline lies within the project cash-flow and valuation model.

8.Ability to critically review economic project valuations conducted by others.

Discipline Specific Skills and Knowledge:

9.Ability to make general evaluations of commercial risk through an understanding of the basis of such risks.

10.Ability to apply due consideration to sources of uncertainty and the limits on knowledge.

11.Ability to employ scientific and mathematical skills in data acquisition, analysis and interpretation in a commercial context.

12.Ability to communicate market research and project valuation findings effectively.

Personal and Key Transferable/ Employment Skills and  Knowledge:

13.Ability to locate and utilise scholarly reviews and primary resources appropriate to the discipline.

14.Autonomy in planning and managing resources that support the syllabus and ability to reflect upon the efficiency of using these resources.

15.That they can conduct and present / report calculations with awareness of professional codes of conduct and can incorporate an ethical dimension and/or exercise personal judgement into/on their work.

SYLLABUS PLAN - summary of the structure and academic content of the module

Energy economics:

Economics of renewable energy, with a focus on micro-economic elements of renewable energy project development.

Societal responses to environmental problems including the role of environmental externalities.   

Theory underpinning the development of new technologies from the research phase through to market readiness.

Consideration of comparative learning curves for multiple technologies.    

Price reduction in response to increased use of a technology.

Introduction to the themes and nomenclature associated with the financial aspects of project assessment and development.

Introduction to and application of the main factors that control capital investment - capital intensity, long pre-production periods, high risks, infrastructure, environmental constraints and nature of resource.

The role and sources of finance in the renewable energy sector.

Feasibility studies: what each is used for; its usual contents; and the level of accuracy of estimates compared to the engineering work actually completed (Order of magnitude, preliminary, definitive, detailed).

Role of Cash flow modelling & valuation.

Price of energy & costs of generation.

Measuring environmental externalities, climate change costs.

Support mechanisms: energy & carbon taxes, green certificates, renewables obligation, emissions trading.

Case studies.

 

Cost Estimation:

Capital costs - the methods available for estimating both fixed and working capital costs, depending on the type of study being carried out.

Operating cost estimation methods.

Cost indices, and a description of the Systems Approach to cost estimating.

Formulation of Cashflow Models.

Revenue, operating cost, royalty, rent, operating margin.

Methods of calculation of capital allowances.

Calculation of taxable income and tax payable.

The cashflow equation.

Valuation Metrics.

Simple payback period.

Discounted cashflows.

Net present value.

Internal rate of return.

Discounted cost of electricity production.

Optimisation and Financial Risk Assessment:

Production rate optimisation methods for energy ventures.

General coverage of risk analysis and how it is used in project evaluation:

Sensitivity analysis, scenario analysis, Monte Carlo Analysis.

 

Project Finance:

Equity

Loan finance

Effect of capital structure on project valuation

LEARNING AND TEACHING
LEARNING ACTIVITIES AND TEACHING METHODS (given in hours of study time)
Scheduled Learning & Teaching Activities 27.00 Guided Independent Study 73.00 Placement / Study Abroad
DETAILS OF LEARNING ACTIVITIES AND TEACHING METHODS
Category Hours of study time Description
Scheduled learning & teaching activities 27 Lectures
Guided independent study 73 Private study
     

 

ASSESSMENT
FORMATIVE ASSESSMENT - for feedback and development purposes; does not count towards module grade
SUMMATIVE ASSESSMENT (% of credit)
Coursework 100 Written Exams 0 Practical Exams
DETAILS OF SUMMATIVE ASSESSMENT
Form of Assessment % of Credit Size of Assessment (e.g. duration/length) ILOs Assessed Feedback Method
Economic modelling exercise 50 2000 words 3-15 Written
Critical review & discussion 50 2000 words 1-15 Written
         
         
         

 

DETAILS OF RE-ASSESSMENT (where required by referral or deferral)
Original Form of Assessment Form of Re-assessment ILOs Re-assessed Time Scale for Re-reassessment
Summative assessment Additonal assessment As above August Ref/Def period
       
       

 

RE-ASSESSMENT NOTES

As above 1 piece of CW 100%

RESOURCES
INDICATIVE LEARNING RESOURCES - The following list is offered as an indication of the type & level of
information that you are expected to consult. Further guidance will be provided by the Module Convener

ELE – CSM3369 ELE Page

Reading list for this module:

Type Author Title Edition Publisher Year ISBN Search
Set David Begg et al Economics 8th McGraw-Hill, London 0077107758 [Library]
Set Drury, C. Management and cost accounting London : Chapman and Hall 1992 0412463903 [Library]
Set Vause. B. Guide to analysing companies London : Profile 2001 1861973918 [Library]
Set Bennett, M., and James, E. Eco-management Accounting : Guidelines for Accountants, Business Advisers and Environmental Managers London : British Standards Institution 2001 0580332527 [Library]
Set Royal Institution of Chartered Surveyors RICS appraisal and valuation standards London : RICS 2003 1842191233 [Library]
Set Redlinger, R. Y., Andersen, P. D., Morthorst, P. E. Wind energy in the 21st century : economics, policy, technology and the changing electricity industry Basingstoke : Palgrave 2002 0333792483 [Library]
Set Sinnott-Armstrong, W. and Howarth, R.B. Perspectives on Climate Change: Science, Economics, Politics, Ethics. Amsterdam : Elsevier 2005 0762312718 [Library]
Set Rothwell, Geoffrey & Gomez, Tomas Electricity Economics: Regulation and Deregulation Hoboken, NJ, John Wiley 2003 0471234370 [Library]
Set Ekko C. van Ierland Economics of sustainable energy in agriculture Kluwer, Dordrecht 140200785X [Library]
Set Price, C. Time, discounting and value Oxford : Blackwell 1993 0631179852 [Library]
CREDIT VALUE 10 ECTS VALUE 5
PRE-REQUISITE MODULES CSM1274, CSM2043, CSM2274, CSM2275
CO-REQUISITE MODULES CSM2319, CSM3361, CSM3365, CSM3371, CSM3372, CSM3375
NQF LEVEL (FHEQ) 3 (NQF Level 6) AVAILABLE AS DISTANCE LEARNING No
ORIGIN DATE Monday 12 March 2012 LAST REVISION DATE Thursday 18 October 2012
KEY WORDS SEARCH Renewable Energy, Resource, Economics