OAFP 9305 - Financing the Energy Transition

This course teaches students how the investments required to make the energy transition happen are financed. It provides students with an understanding of how equity investors and debt lenders assess an investment opportunity and how they structure projects to reach an acceptable risk and return.

Throughout the lecture, students will be provided with practical examples, based on actual financing cases (offshore wind farms, hydrogen platforms, BESS developers, EV charging networks, etc...) to help them better understand how various financing instruments/players are mobilised depending on the maturity of the company (startup vs established businesses), project (high risk vs low risk) and technology (early stage vs commercially proven).

This is a corporate finance course and students should expect discussions about financial concepts such as internal rate of return, interest rates, cash flows generation and allocation as well as basic accounting concepts. Students with no background in finance are most welcomed and actually encouraged to take part, however it is highly recommended that appropriate preparation is followed during summer by making the recommended readings.

This course will NOT focus on (i) public policies underpinning the energy transition (subsidies, permitting, country regulations), and (ii) crowdfunding (iii) nor provide a detailed analysis of a specific energy transition technology (wind, solar PV, electrolysis).

-Renewable energy concepts : production, generation, MWh vs MW

-Basic concepts of energy subsidies : Feed-in-Tariff, Contract for Difference

Sessions will be run as a mix of lectures and practical exercises / concrete examples. Active participation and questions are encouraged.

Active participation: this lecture is meant to be interactive and the teachers expect students to take an active part to the class, raising their hands in case of questions and participating to the small case studies & press reviews.

Press review: each week, all students will prepare a 5 min press review, ideally covering the topic of the week (or one of the topics previously studied) or more generally on energy financing. The purpose of this exercise is to help the students get familiar with the concept of Energy Transition financing and demonstrate that the topics discussed in class are actual, day-to-day issues that drive the Energy Transition.

Press reviews have to be uploaded on Moodle no later than 48 hours before the class. Two/Three students will be randomly chosen to present to the class their selected press articles and the other students are expected to react to the presentation and debate the topic with the presenter for max 10 min for each topic.

Role-playing group case study: students will be split in groups. Each group will work on one of the suggested topics. The topics will be allocated by the lecturers after the first session in September based on students expressed preferences and to ensure all topics are covered. The exam will be held in two steps: (1) an oral presentation lasting 20 min followed by (2) a Q&A from the class & lecturers in the final session.

Students will be assessed on the quality of the case study they have built, relevance of their intervention during the presentation, analysis and rationale for the ultimate decision to invest in /lend to the company/project. Form and substance will both play a role.

No supporting material will be provided to build the scenarios. It is the responsibility of the students to research the topic and then use inspiration from real life examples to build their own scenario within the topic they will select.

Workload for this course will mostly be around preparing weekly press reviews and a final case study (see Course Validation).

That said, the concepts developed in this course are usually new to most students and may therefore require more involvement from them. We invite students to read the mandatory readings before session 2 to start getting familiar with the topic. All the concepts will be explained in class. Also, it is highly recommended to study the contents of the previous session from one session to the others.

In any case, the mandatory readings shall be studied for knowledge consolidation purposes.

Regarding the case study, students are allowed to inspire themselves from real projects. The course is dense but by starting to prepare the case studies from the beginning of the semester, students will be able to gradually consolidate the concepts and illustrate them. We therefore expect the students to prepare the case study all along the semester to ensure quality and fluidity of the presentation.

The lecturers welcome questions by email in the course of the semester or side discussions after class for those students who feel the need for extra clarifications. They will also offer each group a 30-mn check-in in the middle of the semester to discuss progress of their case-study and answer questions.