Finance x Mgmt x Network 넘사벽 강자 🥷🏻 Flashcards
전문가라고 말하려면 이정도는 알아야지
Cash on Cash return?
= Annual before tax retun cash flow / total cash invested
What is Free Cash Flow to Firm?
A company generates cash flows from its operations by selling goods or services. Some of its cash goes back into the business to renew fixed assets and for the working capital requirements.
Free cash flow to the firm is the excess cash generated over and above these expenses. The firm’s free cash flow goes to the debt holders and the equity holders. FCFF or Free cash flow to the firm is used in DCF financial modeling.
Free Cash Flow to Firm or FCFF Calculation = EBIT x (1-tax rate) + Non Cash Charges + Changes in Working capital – Capital Expenditure
What is Free Cash Flow to Equity? FCFE
And FCFE’s limitations?
FCFE Formula = Net Income + Depreciation & Amortization + Changes in WC - Capex + Net Borrowings
Limitations: can be used only when the company’s leverage is not volatile and the company’s debt leverage is not changing.
What is Dividend Discount Model?
Based on the understanding that the fair value of a stock is the present value of all its future dividends.
CF = Dividends
Dividend yield?
Dividend yield = Dividend per share / Price per share
What is difference between Enterprise value and equity value?
Enterprise value = market value of operating assets
Equity value = market value of shareholders’ equity
Equity value = Enterprise value - net debt.
What are methodologies of valuation?
Smaller discipline SMLR DCPL
Discounted cash flow analysis
Comparable comp analysis
Precedent transactions
LBO analysis
Sum of the parts
Liquidation valuation
M&A premiums analysis
Replacement value
What are common multiples of valuation?
P4, E3
EV to EBIT
Price to cash flow
Enterprise value to sales
EV to EBITDA
PEG Ratio
Price to Book value
PE Ratio
TTM
Trailing twelve months: past 12 consecutive months
Comparable comp analysis vs. Precedent transactions?
Precedent transactions are higher. A controlling premium is built into it. (Willingness to pay to secure the majority stake)
LBO analysis
Leveraged Buyout: maximum value that buyer could pay for the target company, given the future value from operations and debt.
EV to EBIT ?
얼마나 성공적으로 비즈니스를 했나 평가지표: to see if the stock is highly priced and earning yield.
PCF ?
Price to Cash Flow = share price / cash flow per share
영업활동으로부터의 현금흐름 관점에서 가격이 몇퍼센트를 차지하나.
낮을수록 투자자에겐 좋다. undervalued 되었다는 거니까.
EV?
the sum of market capitalization, preferred shares, minority shares, debt minus cash
PEG ratio?
The Price/Earnings to Growth ratio, or PEG ratio, is a tool that helps assess how appropriate the valuation of a company’s stock is, given its current market value and future potential. This ratio lets investors figure out if stocks of a company are overly priced or undervalued.
It is a ratio within a ratio as the price/earnings ratio is first calculated, then the result is divided by the company’s expected growth rate.
It states that to be fairly valued or priced, the price/ earning-to-growth ratio should either be equal to the growth rate of earnings per share or should be 1.
PB ratio?
Price to Book Value Ratio or P/B Ratio = market price per share / book value per share.
A good price to book value ratio according to value investors is less than 1.0. On the other hand, a high ratio implies that the company’s market value is significantly higher than its accounting value.
PE ratio?
Price Per Share/ Earnings Per Share
The trailing price-to-earnings ratio is based on past earnings, while the forward price-to-earnings ratio depends on the forecast of future earnings.
The analysts correlate a company’s PE multiple with the PE multiples of competition within the industry. This way, the appropriate valuation of a share is ascertained.
the Price-to-earnings ratio has an advantage of discounted cash flow valuation (DCF) technique; it is not sensitive to assumptions. In DCF, changes in WACC or growth rate assumptions can dramatically change the valuations. Therefore price-to-earnings ratio is extensively used for comparing companies within a sector.
Payback multiple?
The price-to-earnings ratio is primarily derived from the payback multiple.
Initial investment made / net annual cash inflow
Similarly, the PE ratio is the number of yearly share earnings it will take an investor to recover the price paid for the share.
For instance, if the PE multiple is 10x. It implies that for each $1 of earning, the investor has paid $10. Hence, it will take ten years of earnings for the investor to recover the price paid.
How do you value a bank?
Banks are primarily valued using PB multiple.
1) banks have assets & liabilities that are periodically marked to market. So, the balance sheet represents the market value, unlike other industries where the balance sheet represents the historical cost of the assets and liabilities.
2) bank assets include investment in government bonds, high-grade corporate bonds or multiple bonds, along with commercial mortgage, or personal loans that are generally expected to be collectible.
Industry-specific multiples
- Real estate:
REITs (real estate investment trusts) = price / funds from operations (FFO)
Price/ adjusted funds from operations (AFFO) - Retail or airlines:
EV / EBITDAR (rent) - Tech:
EV/ unique visitors; EV / page views - Energy:
Price / Net Asset Value (NAV)
Price / 1 MCFE (million cubic foot equivalent)
Price / 1 MCFED (million cubic foot equivalent per day)
Sum of the parts 예시로, automobile, O&G, software, bank, E-commerce segment 의 대표적인 valuation methodologies 소개하삼
Automobile Segment Valuation – EV/EBITDA or PE ratios.
Oil and Gas Segment Valuation – EV/EBITDA or P/CF or EV/boe (EV/barrels of oil equivalent)
Software Segment Valuation – PE or EV/EBIT multiple
Bank Segment Valuation – P/BV or Residual Income Method
E-commerce Segment – EV/Sales (if the segment is not profitable) or EV/Subscriber or PE multiple
Which is better valuation methodology - PE or EV to EBITDA?
EV to EBITDA is better because of following reasons:
1) PE doesn’t consider balance sheet risk. Earnings are subject to different accounting policies. It can be easily manipulated by management.
2) PE cannot be used when earnings are negative. One must use normalized earnings or forward multiples in such cases. But if EBITDA as well as FCFF are negative, EV to Sales can be used.
Can Terminal Value be negative?
Terminal Value is the value of a business or a project beyond the explicit forecast period wherein its present value cannot be calculated. It includes the value of all cash flows, regardless of duration, and is an important component of the discounted cash flow model (DCF).
Theoretically yes but practically no.
Terminal value = (FCFF * (1+ Growth rate)) / (WACC - Growth rate)
In the above calculation, if we assume WACC < growth rate, then the value derived from the formula will be Negative. This is very difficult to digest as a high-growth company is now showing a negative terminal value because of the formula used. However, this high growth rate assumption is incorrect. We cannot assume that a company will grow at a very high rate until it is infinite. If this is the case, this company will attract all the capital available in the world.
Capacity mechanism in 2028?
Kraftwerkstrategie
Germany’s ruling coalition has agreed to speedily set up state support auctions for 10GW of new gas-fired power plants which will then be converted to run on hydrogen between 2035 and 2040. It also agreed to develop a capacity mechanism to be operational by 2028.
+ Opex subsidy for the difference between hydrogen and gas prices. That is fuel subsidy, that leads to decreased fuel switch costs. Therefore, electricity price forecast of mid term shows decreased.
Chancellor Olaf Scholz, economy and climate minister Robert Habeck and finance minister Christian Lindner agreed “that new power plant capacities of up to 4 x 2.5 GW will be put out to tender as H2-ready gas-fired power plants soon as part of the power plant strategy, which are to switch to hydrogen between 2035 and 2040,” the economy ministry said in a press release. The government did not provide any details on the volume of support, or a timeline for the auctions, but emphasised the need for speed.
Germany’s governance body?
BMWK, Bundesministerium für Wirtschaft und Klimaschutz
4 TSOs of Germany
TransnetBW, Tennet, 50 Herz, Amprion
Ukraine crisis 이후 유럽 전력시장 개편 움직임
In December 2023, the EU formally agreed on power market reforms,
including the mandatory adoption of two-sided CfDs.
This will be mandatory for new subsidized renewables and nuclear.
RED II Delegated Act? - hydrogen to be classified as renewables?
Renewables Energy Directive
The RED II Delegated Act defines additionality, geographical and temporal
correlation criteria that must be satisfied for H2 to be classified as renewable.
However, hydrogen producers who source their electricity from the grid or directly from renewables are
exempt from proving certain criteria
Gas, coal, carbon, hydrogen prices
Gas Europe - TTF day-ahead 30EUR/MWh, Henry hub 30% fell y-o-y
Coal - ARA monthly average of front month prices 97 dollars per Tonne in Feb. Newcastle 이라는 인덱스도 있음.
Carbon- monthly average of daily EU ETS Front year prices 57.6EUR/tCo2 in Feb, dropped.
Hydrogen - HYDRIX EEX hydrogen index, average across 2023 converted to Higher Heating Value (HHV) terms is almost 200EUR/MWh.
Clean spark spread, dark spread, quark spread and bark spread?
Clean spark spread or “spark green spread” represents the net revenue a gas-fired generator makes from selling power, having bought gas and the required number of carbon allowances.
The term dark spread, quark spread and bark spread[1][2] refers to the similarly defined difference between cash streams (spread) for coal-fired power plants, nuclear power plants and bio-mass power plants respectively.
SMART goal?
Specific, Measurable, Appropriate, (ambitious but achievable) Relevant, Terminated
Platform as a multi-sided marketplace
Key concepts and constructs:
Regulated participation of multiple sides (user groups): interaction/ transaction rules; matching of sides
Economics of multi-sided markets:
same-side (direct) and cross-side (indirect) network effects; pricing strategies & revenue sharing
Platform envelopment
Examples: Uber, Airbnb, Ebay, Alibaba, Amazon, YouTube, Twitter, Facebook, Kickstarter, Indiegogo, LinkedIn, Match.com, Monster.com
Timing of market entry (strategic decision) - advantages of pioneers and followers
Advantages of pioneers
- Technological leadership
- Discriminating appropriation of scarce resources
- Specific restrictions or behavioral patterns on the customer side
Advantages of followers
- exploitation of free-rider effects
- resolution of technological and demand-related uncertainties
- technological innovations or shifts in demand
Corporate venture capital? And its objective
Venture capital funding provided by major corporations to startup companies with a high potential for growth
The ultimate objective may be to acquire the startup and consolidate them with the company’s internal initiatives. If this occurs, the CVC partner may be seeking complimentary opportunities or related emerging, disruptive technologies.
Publicly-owned company의 경우 리턴이 목표는 아니고 (주주들의 의견에 반해서 리스크 높은 사업에 투자하기는 힘드니까) 밴처캐피탈 펀드나 PE Vehicle 을 통해서 직접투자하는 경우가 많다.
Host company —> CVC Fund —> Portfolio companies
Pros and cons for both sides?
Pros:
Host company: rolip
option to learn business models, markets and technologies, industry creation, pre-empt competition, option to acquire, financial returns
Portfolio companies: cdtif
corporate certification, distribution channels, technological support, industry contacts, financing
Cons
Host company: hlt
possible harm to brand, possible litigation if stealing of business idea is suspected, time demands of managing disparate cultures
Portfolio companies: cs
less opportunities to cooperate with competitors of the investor, risk of having business ideas stolen
Implications of position on the S-curve?
Important factor for technological performance forecast. Robust heuristics.
- Early stage, low R&D productivity: lots of early failures
- Riding up the S-Curve: focusing on an overall ‘architecture’, following on narrower and more well-defined technical challenges; leveraging prior experience
- Hitting Natural Limits: key physical limits determined by broad technical choices
Tech s-curves: challenges
Local search bias,
Performance measures change.
Measures for UIC
QCUH5
DV: Firm performance: Tobin’s Q (stock price related performance)
Collaboration intensity: joint publications related to the firm’s total cost scaled in a mil $.
University quality: proportion of universities from THE ranking in the total numbers of collaborative universities
University concentration: Herfindahl-Hirschman-Index (HHI) within collaboration network
Basic research orientation: 5-year average impact factor of the journals, where the publications have been published.
IPR type, scope, procedure, examination, max terms
IPR type, scope, procedure, examination, max terms
Patent - Invention - Registration - Examination - 20 yrs
Registered utility model - technical invention (no process) - registration - no examination - 10 years
Registered design - design, use - registration - no examination - 25 years max, 3 years use
Trademark - for goods and services - registration - examination for absolute protection obstacles - renewable every 10 years
Copyright - literature, art, software - no registration - no examination - 70 years beyond holder’s death
EU Patent criteria
Patents protect technical inventions that are:
Dov. (Industrially applicable, non-obvious, novel)
- Industrially applicable (USA: useful) (technically reproducible, technical character and technical effect)
- Novel to the world
- Non-obvious to the average professional practitioner (that is they are exceeding a certain minimum level of invention -> inventive step)
EU Patent criteria
Not patentable are (examples) according to the European Patent Convention Art. 52
DASCOM
Discoveries (e.g. chemical elements)
Scientific theories (e.g. Einstein’s relativity theory)
Obscene or harmful inventions
Artistic expressions/ works (e.g. form of a prosthesis)
Mathematical methods (e.g. binomial formulas)
Computer programs
KPI 로써 financial ratios 종류
PALL
- Profitability ratio: profit margin, ROI
- Asset management ratio: efficient use of net working capital
- Financial leverage ratio
- Liquidity ratio: short-term solvency of a business
Difference between provision and reserve?
provisions are for known liabilities or losses, while reserves are for specific purposes.
Balance sheet items
Assets
> Current assets
» cash and cash equivalents
» account receivable
» inventory
> Non-current assets
> PPE (property, plant and equipment)
> intangible assets
Liabilities
> Current liabilities
» Accounts payable
» Other financial current liabilities
> NC: Long-term debt
> Shareholder’s equity
> common stocks
> retained earnings
Profitability margin?
Net income / Revenue
Analysis makes sense only when an industry comparison is made.
Return on sales?
= EBIT margin
= EBIT / Revenue
Only makes sense when an industry comparison is made.
Gross profit margin?
(Revenue - COGS) / Revenue
Analysis makes sense only when an industry comparison is made.
Return on investment?
Return? Investment?
ROI = Return / Investment
Return is a profit number, originated from income statement.
Investment is an asset or resource that may generate income in the future. (E.g. total assets, capital employed, owner’s equity), originated from the balance sheet.
ROE? What does ROE represent?
Return on equity = Net income / Owner’s equity
A measure of the company’s performance from the viewpoint of shareholders.
It determines the time needed until an investment is returned to the investor.
Net income is the profit attributable to shareholders.
Their contribution is depicted as owner’s equity in the balance sheet.
This makes both figures a natural match.
ROA?
Return on assets = EBIT / Total assets. Profit earned from all of the company’s assets.
Unlike ROE, ROA is not dependent on the capital structure.
Total assets is identical to total capital, which is made up of equity and debt. So a matching profit figure should include returns for both the providers of equity and debt.
ROCE?
Return on Capital Employed = EBIT / capital employed
Considers only equity and interest-bearing (financial debt). Thus it calculates the yield earned on a capital that requires a return.
Same as ROE - having EBIT as a numerator, a measure that includes proceeds to be paid to creditors and owners.
ROI’s issue and solution?
Logical inconsistency that comes from different time dimensions the figures have.
Solution: to replace the figures from the balance sheet with more representative figures, like averages from 2 different balances sheets, e.g. one at the beginning and one at the end of a period.
Inputs from the same financial statement
Vs.
Inputs from different financial statements
EBIT margin = EBIT / Sales
ROA = EBIT / Assets
TAT?
Total Asset Turnover = Revenues / Total assets. How successful a company generates sales with existing assets.
Indicator of asset utilization
Business can either start utilizing idle capacity or simply eliminate them.
FAT?
Fixed Asset Turnover = Revenues / PP&E
Company’s ability to generate revenues from investments in non-current tangible assets, in particular PP&E.
Since fixed assets are considered net of accumulated depreciation, FAT might also be a signed of fixed asset base.
Inventory turnover?
COGS / Inventory
A low turnover may suggest overstocking or obdolescence.
A high turnover rates suggest inventory efficiency.
Yet management must be careful regarding possible stock shortages.
Inventory turnover?
COGS / Inventory, measures how efficiently management mange inventory.
A low turnover may suggest overstocking or obdolescence
A high turnover suggests inventory efficiency.
However, management must be careful regarding possible stock shortages.
DSI?
Days sales in inventory. Measures how long it takes on average to sell the inventory.
365 days / Inventory turnover = Inventory / COGS * 365
High DSI shows flexibility (재고가 많으니까 판매 융통성이 크다는측면), but high stock levels may be considered as inefficient.
DRO?
Days receivables outstanding = Accounts receivables / Sales * 365
A measure for the time it takes on average to collect accounts receivable.
DRO only considers credit sales. If a company has both credit and cash sales, the ratio will be diluted by the cash sales (which have a collection period of zero)
DPO?
Days Payables Outstanding = Accounts payable / COGS * 365
Average time to pay a bill
This ratio produces meaningful results only if COGS mainly represents the cost of purchases (for a retailer) or the cost of material (for a manufacturer) and not the entire manufacturing cost.
Cash conversion cycle?
= working capital cycle
Gap between DPO and DRO
DWC?
Days working capital = DSI (days sales inventory) + DRO - DPO
It represents the time a company needs to finance current assets and thus be able to offer its products or services in the market.
To bridge the gap: mainly by external funds.
Companies often need to pre-finance their operating cycle with capital that must be available simply to ‘keep the business going’.
Capital structure ratio?
Total debt ratio = total debt / total asset.
This analyzes the composition of the funds on the right side of the balance sheet.
Debt to equity ratio?
Called ‘gearing’, and reveals how much funding is provided by lenders versus owners.
A ratio above 1 means the company employs more debt than equity.
The ratio is used in leverage effect formula.
Equity multipler?
Total assets / Total equity = 1+ Total debt / Total equity = 1 + debt-to-equity ratio.
Indication of how leveraged the company is.
Shows how much in assets the company finances with its equity.
Interest coverage and EBITDA-to-interest ratio?
EBIT / interest expense
Measures whether the operating profit is sufficient to cover for the interest charge of the business.
Because EBIT is not a measure of cashflow, sometimes investors, analysts, and controllers prefer to add back depreciation and amortization to EBIT (thus EBITDA)
Net debt to EBITDA? How much is generally considered as fine?
Net debt / EBITDA
Tells how long it would take to pay down net debt with current EBITDA.
Tells the amount of debt the company has and its ability to redeem it.
Any values below 4 are generally considered as fine. Values of 4 to 5 or higher are seen as increasingly dangerous.
How to increase the return the shareholders receive?
And explain the leverage effect formula
Given the formula ROE = net income / owner’s equity,
- Increase the numerator: sell more goods, and/or cut costs.
- Decrease the denominator: lower the amount of equity by replacing it with debt.
Solving the leverage effect formula for ROE = ROA / equity ratio - interest rate x debt ratio / equity ratio
yields ROE = (ROA - interest rate) * total debt / total equity
As long as ROA is higher than the interest rate, an increase in leverage will boost ROE.
Because of decrease in net income (why?), owners must know ________________________.
Since total assets are financed by debt and equity, the return a company makes on its assets must be equal the return on equity plus the return on debt, each weighed by its capital proportion.
ROA = ROE * equity ratio + interest rate * debt ratio
Because of decrease in net income (the higher the debt, the larger the interest payment), owners must know when the leverage effect trade-off makes sense.
Performance measures in logistics
CDR
Delivery reliability (in %) = number of items delivered as specified / total number of delivered items x 100
Supply chain cycle (SCC) = Procurement time + production time + internal inventory time + packaging and shipment time
—> this ratio measures the time elapsing between placement of an order with the company’s supplier and shipping of the finished goods to the company’s customer.
Replacement time: measures the period between triggering of the order for an article and its arrival at the required location
Performance measures in HR
Staff fluctuation rate (in %) = number of employees leaving company in period / average number of employees in period x 100
Absenteeism rate (in %) = number of absenteeism days in period / total number of budgeted working days in period x 100
Employee satisfaction: this is often measured using questionnaires that cover different aspects of employees’ work environment and their satisfaction with these individual aspects.
Performance measures in manufacturing?
TPR
Productivity = produced output quantity / resource quantity consumed
—> this ratio relates an output quality to a resource quality that is consumed in order to produce that output quality
Reject rate (in %) = rejected quantity in period / total quantity produced in period x 100
Throughput time = process occupancy time + transition time + idle time
—> the time that a product takes between the first work operation and the last work operation is measured.
Performance measures in marketing?
PCC
Customer churn rate (in %) = number of discounted customer in period / number of customers at beginning of period x 100
Click Through Rate (CTR) (in %) = number of AdClicks / number of AdImpressions x 100
Price elasticity of demand = relative change in quantity demanded (in %) / relative change in price (in %)
Non-manufacturing costs budget?
What are the costs of the other functions along the value chain that are necessary to produce our goods?
Budgeted income statement?
What is the expected profit to be earned?
The cash budget is a direct expression of management’s willingness to __________________.
High-budgeted cash reserves are a sign of ____________________, while low-budgeted cash reserves indicate more of a ____________ mentality.
Take the risk of insolvency
Risk-averse management
Risk-taker mentality
Motivational aspects of budgeting
Theory says that the highest performance is triggered when a budget is set at a rather difficult level. Thus, setting the budget at a high level will trigger the highest performance.
On the other hand, it must be considered that it will also lead to an adverse budget variance.
Expectation budget, aspiration budget?
Performance x degree of budget difficulty 그려봤을 때, Budgeted performance (budget level) 은 당연히 일직선으로 양의 기울기.
Actual performance 와 닿는 점으로부터 y 축으로 쭉 그은선, 최고점으로부터 y 축으로 쭉 그은선을 각각 Expectation budget, aspiration budget이라고함.
Aspiration budget - actual performance 사이의 간극을 Adverse budget variance 라고 함.
Motivational effects of budgeting
+ to invoke the highest level of actual performance, budgets should be set as a stretch goal and any adverse variances should be considered normal.
- If budgets are set as too difficult, and employees never reach a target, motivation will suffer over time.
- Unattainable budgets may motivate people to take short-term unethical actions, such as budget gaming and data manipulation.
- When budgets are set too high, planning and coordinating the other aspects of the value chain can become awfully difficult and expensive.
—> typical compromise used in business practice is the usage of realistic, but challenging budgets with a reasonable probability of being achieved. This allows for a combination of the planning and coordination function with the motivation function of budgets.
Top-down budgeting, bottom-up budgeting and participative budgeting
+ and - ??
Budgetary slack?
Top-down budgeting:
+ strategic goals are incorporated in budget
+ quicker to set up
- budgets ex Cathedra may not be accepted by operating managers and employees
- no specialized / first-hand market knowledge incorporated.
Bottom-up budgeting (participants: line and operating managers only):
+ ensures line managers’ commitment to meeting the budget
+ specialized / first-hand market knowledge is incorporated
- no alignment with strategic goals
- subject to manipulations (e.g. budgetary slack)
Participative budgeting: mixture
Budget manipulation types?
Budget gaming
- Budgetary slack: underestimate revenues and overestimate costs to make budgets easily achievable to benefit from bonuses and performance rewards
- Budget lapsing: 보도블럭 공사. money is spent at the end of a period, just to avoid the budget being cut in the next period. Sometimes, necessary spending is deferred to the next period just to meet this period’s budget.
Reasons of budget manipulation? Possible to completely avoid it? How to mitigate?
Info asymmetries / hierarchies / personal interests
- Budgeting is a process featuring information asymmetries. Information advantages can be used to achieve individual goals.
- Personal interests of the budget participants may lead to hidden agendas as participants might hide their true intentions in influencing budget goals.
- Budgets often reflect hierarchies and power in a company and can be highly political leading people to dysfunctional behavior.
—> As long as humans are involved in the budgeting process, it is not possible to avoid budget gaming completely. Yet, by getting involved in the budgeting process, managers can mitigate the problem.
Reporting dimensions, order and structure - success factors
- Automated and fast reporting processes
- Short reports
- Connecting performance indicators to strategy
- Comprehensive performance indicators
Management and its functions?
Management is the act of getting people together to accomplish desired goals and objectives.
Functions:
1. Planning
2. Organizing
3. Commanding and leading
4. Coordinating
5. Monitoring
Definition of accounting
Accounting denotes the system that records, analyzes, and reports business transactions of a company systematically to provide useful information to its users.
Accounting is a system because it comprises various elements that are logically connected: individuals, tools, information
An accounting system records business transactions, which is any event that affects the stocks and flows of goods and resources such as inventories and machines.
Management accounting? Efficient utilization of resources?
Is the internal accounting system that supports managers in carrying out management tasks.
For efficient utilization of resources, managers need precise information.
Management control? Strategy?
Control makes sure that management reaches a desired goal, Management control assists managers in ensuring that a company reaches its strategic goals.
Strategy is the sum and combination of all intended activities to bring about a desired future. The most common strategy defined by Michael Porter is cost leadership and differentiation.
Management control is a set of activities, systems, and processes by which managers influence other members to implement the company’s strategy.
Cost elements of management control systems?
Operational planning
Budget preparation
Resource allocation
Performance measurement
Evaluation and employee compensation
The roles of managers and controllers
Management control lies where manager and controller intersects.
A controller combines business expertise with other technical and analytical competencies from accounting, planning, information processing, and process management.
Job?
Is a goal, task or anything a group of people are trying to achieve or accomplish.
Job-to-be-done through outcome-driven innovation
Process
- Define the market: job executor and job to be done
- Uncover the customer’s needs, tied to the JTBD
- Quantify the degree to which each need is under/ooverserved
- Discover hidden segments of opportunity
- Use the data model to innovate
(JTBD) market definition: defining the core functional job
Identify all the products/ services the customer is using in conjunction with yours
Define the JTBD at the correct level of abstraction (e.g. not boil water but prepare a hot beverage for consumption)
Don’t ask “what job does my product do”, but ask “what job is the customer trying to get done”
Rules of core functional job
Functional- not emotional
Active
Free from solution - no technology, product, service or feature (solution agnostic)
Free from ambiguity - clear and concise
Consistency
JTBD Framework Job Map
Job executor - core functional job - job steps
10-20 job steps 가 rule of thumb
Rules of job map
The job map is used to analyze the core job by decomposing it into ideal sequence of steps
Generalized
Ideal
Functional
Format follows the rules (solution agnostic, format, no jargon)
Active
Completeness
Customers measure success of their jobs execution in 3 dimensions
Time
Stability
Output
JTBD framework consumption chain jobs
Are product/service-related jobs that executors need to get done, which are related to the lifecycle of the produce/service.
Consumption chain jobs
- inform about opportunities to providing new/improved services/products to help customers get these consumption chain jobs done better
- can be analyzed at different levels: a priori selected CCJ, full set of CCJ, core functional job with job steps and outcomes
JTBD Framework - Emotional jobs?
Define how customers want to feel and how they want to be perceived by others when getting the job done.
Are stable over time and tied to the JTBD.
JTBD Frameworks - related jobs?
Are further functional jobs customers have to get done before, during, or after executing the core functional job.
Are stable over time and tied to the JTBD.
JTBD Framework - financial metrics?
Specify what buyers want to achieve from an economic perspective when getting the job done.
A need is unmet when _________________.
It is important to the customer population, but not satisfied by existing solutions.
Customer needs are typically prioritized through a quantitative survey with job executors.
Standard questionnaires?
- CATI/CAPI survey
- Online survey
- a priori defined sample ensures representativeness of research results.
- answers on a 5-point rating scale for importance and satisfaction.
Opportunity landscape - implications for innovation potential
Satisfaction (y) x Importance (x)
Overserved needs(왼쪽위): depreciate the focus for cost savings
Appropriately served needs(왼쪽바닥): limited growth potential
Underserved needs(오른쪽바닥): extreme growth potential
Table stakes (오른쪽위): neglecting these needs could quickly have a negative impact on the customers perception.
Traditional segmentation criteria such as _____________ often fail to identify distinctive needs patterns to derive __________________.
—> _______________ segmentation is necessary.
Demographics
Differentiation strategies
Needs-based (outcome-based) segmentation
Value proposition - to specify what?
- created solution
- for whom? (Executor, customer segment)
- to achieve what? (Addressed JTBD and unmet needs)
- existing competitive solutions in use?
- competitive advantage against existing solution?
Business model canvas
-Value proposition
-Customer segment
-Revenue stream (willingness to pay, financial metrics of customer)
-Customer relationship/channel (consumption chain jobs, emotional jobs)
Tech T curves: strength & challenges
Strength:
1. Often conceptual core for tech strategies
2. Allows insights based on empirical data
3. Can compare different technologies (also across industries)
Challenges:
1. Which technologies to select
2. Determining performance measure
3. Determining / and prediction of cumulative R&D expenses
4. What are the max performance levels?
The set of tools and methods used in recording, allocating, and analyzing costs.
Cost accounting
Limitations of cost accounting
Costs are administered rather than proactively managed
Combination of all activities and tools used to influence cost to achieve company goals.
Cost management
Focus: managing cost levels, cost behavior, cost structure
_________ follows a strict cause-and-effect logic. It allocates costs to cost objects based on activities undertaken to produce each product or service.
Activity-based costing
___________ are performed in cost centers with assessable results.
___________ a combination of logically connected activities across several cost centers
Activities
Process
Strengths of activity-based and process-based costing
Better cost allocation
Better cost tracing: focusing on activities rather than cost centers
Process-based performance measurement
Powerful tools of cost management: help identifying inefficient activities and processes
Comment on the goal of maximizing sales revenue
The goal of maximizing revenue does not necessarily produce profits, as revenue maximization and profit maximization are two different objectives.
Differences between the cash budget and the budgeted income statement
The cash budget includes cash inflows and outflows. In many cases, revenues are different from cash inflows, and costs are not necessarily equal to cash outflows.
Setting the budget at a high level will trigger the highest performance.
On the other hand?
It must be considered that it will also lead to an adverse budget variance.
—> usage of realistic but challenging budgets with a reasonable probability of being achieved.
—> planning + coordination function + motivation function of budget
Identifying lead users
- Parallel search - gold washing
- Sequential search - playing golf (친구의 친구의 친구의..)
Mode?
Most frequent value
Quartiles and percentiles?
Divide the dataset into 4 parts with equal dimensions, sorted in ascending order. First quartile = 25th percentile
Boxplot?
= box, whisker diagram
A graphical representation of a variable, characterizing its distribution from an aggregated perspective
Histograms?
Represents the frequency distribution of the sorted variable values
For continuous data (or sparse data sets), group the data into classes (sturge’s rule - constant k).
Variance?
Evaluates how much the data are dispersed in relation to the arithmetic mean.
The higher the values, the higher the data dispersion.
Standard deviation and coefficient of variation?
S: square root of variance
—> absolute measures stating variability in the unit of the variable itself.
CV: normalized standard deviation
—> states variability in relative terms
Shadow price?
How much does the objective function value improve if we increase the bottleneck capacity by one unit?
Branch & bound approach?
Mixed-integer linear programming (MILP)
For new problem, determine upper boundary,
And add further constraints until it reaches the lower boundaries…
Types of simulations?
Static simulations (monte Carlo simulation): representation of system where time does not play a role (all decisions are fixed)
Dynamic time-continuous simulations: modeling of systems composed of stocks and flows
Dynamic discrete-event simulations: modeling of systems where the state evolves in time based on a series of discrete events
Modeling randomness of input data - types of distribution
- Continuous variables
Uniform distribution
Triangular distribution
Normal distribution (Gaussian distribution)
Exponential distribution
Erlang distribution
Gamma distribution
- Discrete variables
Bernoulli-Distribution
Poisson-distribution
Modeling randomness of input data- challenges?
Data should be representative, so observations over a few hours or days are often not sufficient.
Seasonal and structural changes require special attention.
PDF, CDF?
Probability density function
Cumulative distribution function
Reciprocation?
Is the act of responding to a gesture or action with a similar or equivalent one, often seen as a social obligation to return favors or kindness.
Precaution Adoption Process Model
Unaware of issue
Unengaged by issue
Undecided about acting
Decided not to act / decided to act
Acting
Maintenance
______________ refers to an individual’s belief in their ability to successfully execute specific tasks or achieve desired outcomes.
Self-efficacy
- emotional arousal (I’m nervous before presentation)
- symbolic experience (my friend tells me I can do it)
- vicarious experience (my classmate has already done it well. Similar person)
- mastery experience (I have done this before.)
Anchor effect?
Middle price is preferred to be chosen.
Nudging is built on _______________
Libertarian paternalism
Libertarian: free
Paternalism: Latin for father. Hierarchical relationship with unequal partners. Decision architects try to influence people’s behavior.
What is management?
Lat. manus agere: to lead by the hand
Or mansionem agere: to run the mansion (for the proprietor)
Means to make things happen!
Consisting of the following:
- Organisation
- evaluation
- communication
- motivation
- development and promotion of people
Market liberalization - Third package: competition, fair market access, securing capacities of transmission and supply?
Functioning competition requires grid access to be non-discriminatory, transparent, and reasonably priced.
Unbundling of transmission grids to establish a clear distinction between grid activities (production and supply)
Impact of deregulation (EU Directive and third package)
- Margin pressure (price declined, overcapacities in power generation and gas exploration)
- Saturated market —> Turnover stagnation/ decline (emergence of new market participants such as energy traders, brokers, IPPs)
- Privatizations (sales by municipalities with far-reaching concessions)
—> internationalization efforts of foreign utilities, efforts to expand the value chain of major domestic utilities
Mintzberg’s 5 P’s for strategy
Plan
Pattern (consistent over time)
Position
Perspective
Ploy (intended maneuver)
10 schools of thought of strategic management according to Minzberg
Perspective schools
- design
- planning
- positioning
Descriptive schools
- entrepreneurial
- learning
- cognitive
- power
- cultural
- environmental
- configurational (combination)
Positioning school - prerequisite, strength and weakness
Prerequisite: strategies are generally Prêt-à-porter options
Strength: basis for a number of significant strategy concepts
Weakness: narrow perspective
Design school - prerequisite, strength, weakness
prerequisite: easy and informing
strength: easy to understand and apply (e.g. SWOT)
weakness: over-simplify the process of strategy formation
Planning school features: prerequisite, strength, weakness
prerequisite: after formation, implementation through detailing objectives, budgets, programs and operating plans
strength: data provision
weakness: creates inflexibility regarding interruptions
Porter’s 5 forces
Competitive Rivalry,
Supplier Power,
Buyer Power,
Threat of Substitution, and Threat of New Entry
4 C concept
Know your consumer needs and wants
Cost
Convenience
Communication
4 P concept
product, price, place, and promotion
BCG growth- share matrix
Growth potential y x (relative market share) x
Gh, Sh: Question marks (zero or negative profits)
Gh, Sl: Stars (high profits)
Gl, Sh: Poor dogs (dispose)
Gl, Sl: Cash cows
Test to measure the distance of the target market?
RAT
Relevant
Appropriate
Transferable
Current trend/challenges in the energy market
Decarbonization,
Decentralization (less performance of plants, constructed outside of the load centers, prosumers),
Digitalization (importance of data analytics)
Perpetuity?
Never ending annuity or a constant cash flow that continues forever.
PV = C / r
E.g. 상속
Growing perpetuity?
Never ending annuity that grows over time by g% p.a.
PV = C / (r-g)
Annuity?
PV= C / r * ( 1 - (1+g)/(1+r)^T )
Growing annuity?
PV = C / (r-g) * ( 1 - (1+g)/(1+r)^T )
Goodwill-amortization calculation?
Goodwill 영업권, 동일업종 타기업에 비해 초과수익 올릴 수 있는 능력. M&A 시 asset 계정. 영세점포의 권리금 같은 개념.
영업권의 수명은 무한대이고 상각하지 않는게 원칙이지만, 손상 발생시 (Impaired) 차감.
그리고 제한적인 비용처리를 위해서 “감액상각“ (Impairment)을 함. 즉, 주기적으로 떨어내는게 아니라 한번에 함.
그리고 인수합병시엔 상각 않고 그냥 둠 - 실적 낮아보이니까.
Tax loss carry forward?
A provision allowing a tax payer to move a tax loss to future years to offset a profit.
Gross/ net asset value difference?
Before or after deduction of liabilities
Methods of company evaluation: single value, total value?
Single value method (substantial value method)
- asset values
- replacement values
- liquidation revenues (market to market)
Total value method
- market value of own or comparable company (public market method)
- comparable company disposals (merger market method)
- income method (cash value of expected surpluses)
- DCF
Asset value method - + and - ?
+ objective (assets from the balance sheet)
- past oriented, cost-based
- no intangible assets
- hidden revenues (lowest value principle): resulting from undervaluation
Replacement value method + and - ??
+ current replacement values taking into account age due to impairment (less liabilities)
+ consideration of intangible assets
- subjective, if no market exists
- determination of actual value assumption (value based on current value of the investments. I.e., initial investment and current depreciation)
Liquidation value?
Sales revenue of individual assets at current market prices (less liabilities)
Merger market method?
Sales revenue of a comparable company.
Value can be set via a transaction.
Public market method?
Current market value after listing.
Market value corresponds to the enterprise value.
The design of business model according to Osterwalder?
Market- oriented and resource-oriented parts
The RCOV framework from Demir and Lecocq?
4 main components from resource-based perspective:
- resources
- competencies
—-> central elements
- value preposition
- organization
- external factors not considered.
Contents of business planning?
- Summary
- Founding persons
- Business idea
- Industry and market
- Marketing
- Organization / employees
- Legal form
- Chances / risks
- Financial planning and funding
- Documents
4 trends of digitalization in energy industry
- Detailed & decentral
- Energiewende becomes more European (cross border)
- Convergence of systems and markets: electricity, heat, e-mobility… merge
- Customers as partners (prosumerism)
Business model design - Weil und Vitale
Power generation - utility - grid operator - customer
Exchange
Metering point operator
Potential technical answers on challenges of energy transition
- back-up capacity
1) ordered residual load line이 시사하는것?
2) 특징?
3) green hydrogen?
1) PV&Wind의 확장은 그들의 peak gen이 증가한다는것 뿐 아니라, full load hours of thermal power plants decrease.
2) comparably high marginal, but low investment cost.
e.g. gas turbine, gas engine
3) PV&Wind –> electrolyzer –> compressor –> storage –> turbine –> electricity & heat recovery
DSM inplication, 특징?
Demand Side Management
1. implications
1) 수요 자체가 준다는건 back up capacity가 줄어든다는거고, curtailment도 줄어든다는 것임
2) capacity utilization of thermal power plants can be increased.
3) Security of supply increases.
- 특징
1) DSM은 주로 by financial incentives, education
2) Load shedding, load shifting 이 목적.
Load shedding, load lifting 정의
Load shedding:
- uppeak, downpeak 완화시키기
- in basic industry, widely used.
Load shifting: peak 가라앉히기
- service/ domestic home sector에서 low importance로 작동.
Load shedding 특징
- 몇시간만 가능. otherwise endangers production facilities
- viable for balancing short-term RES-E shortage
- not viable for long lasting poor wind situation
그러나 wind turbine은 such limitations가 없다는점.
DSM 대상?
mechanical wood pulp, aluminium electrolysis, chlorine electrolysis, electric arc furnace 등
DSM Cost structure 와
load shedding and load shifting 각각의 structure
DSM 공통적으로
- investment: installation of smart pool, measurement, control, comm, tech
-fixed costs: IT, transaction, controlling costs
- variable costs: additional labor, material, O&M costs, opportunity costs for production shortfall
- load shedding 비용 특징
low investment, high variable costs (activation leads to production/ profit loss) - load shifting 비용 특징
high investment cost, low variable cost (activation has almost no influence on client benefits)
Barriers/ future of DSM
- DSM economies depend on wholesale power price level (load shedding) and volatility (load shifting)
- Load shedding은 basic industry에서 어쨌든 쓰이는거긴 함. 근데 peak shaving은 가격 비싸면 grid charge optimization 측면에서 조정하는거니까, 시스템 안정 측면에서 바라봐야한다.
- retail 수요는 실시간으로 등록이 안될뿐더러 소비자는 가격에 민감하지 않으니 (scarcity fear, scarcity-driven) 스마트 미터를 roll-out 해야한다.
Energy storage classifications
1. # of possible charging/ discharging processes
1) primary energy storage
- 한번씩만 충방전.
- e.g. fossil fuels, one way batteries
2) secondary energy storage
- 여러번 충방전.
- e.g. batteries, pumped storage plants
Energy storage classifications
2. intra- / inter-sectoral storing
1) intra-sectoral storages
- 충방전이 전기/heat/traffic 등 한군데서만.
- e.g. pumped storage as classical electricty storage, hot water tank as heat storage
2) inter-sectoral storages
- 충방전이 uni- or bidirectional operating possible.
- e.g. night storage heater, power-to-heat (electricity unidirectional stored in the heat sector)
Energy storage classifications
3. physical functional principle
1) electrical
- condenser, coils
2) chemical / electro-chemical
- power to gas (hydrogen, methane)
- power to liquid (liquid fuels)
- power to chemicals (chemical basic material)
- batteries (lead, lithium, redox-flow, etc)
3) mechanical
- pumped storage
- compressed air (potential energy)
- flywheel mass storage (kinetic energy)
4) thermal
- sensible heat storage
- latent heat storage
- thermochemical heat storage
Energy storage classifications
4. Power/energy ratio
1) short term storage
- second, minutes, hours, day storage
2) long term storage
- week, month, seasonal
Load duration 별 energy storage 적용 사례
high power ——————– high energy
second min hours/days
적용사례
second
- load control
- frequency control
min
- black start capability
- uninterruptible power supply
hours/ days
- island grids
- peak shaving
- E-vehicles
Pumped Hydro Storage 의 원리
The pump and turbine unit are attached to a reversible electric generator/motor system.
When demand for electricity is high, water flow is reversed and the accumulated water in the upper reservoir is released towards the lower reservoir, passing through the electricitygenerating turbine system. The electricity generated is then fed into the grid
Pumped Hydro Storage 장단점
장
- established technology with high technical maturity and extensive operational experience
- very low self-discharge
- reasonable round trip efficiency
- large volume storage and long storage periods are possible
- low energy installation costs
- good start/ stop flexibility
단
- geographic restrictions
- low energy density
- high intial investment costs, long construction period
- environmental concerns
BESS 연결도
배터리 —(DC) — 인버터 & BMS —(LV AC) — 트랜스포머 —(MV AC) — 케이블 — 그리드
BESS Components
Battery cell - module - panel - & PCS - battery system
2h에 인버터 1, 트랜스포머1, 배터리 2
4h에 인버터 1, 트랜스포머1, 배터리 4
요즘은 1컨에 4-5MWh
Portfolio effect of grid expansion
Grid expansion lowers regularly capacity needs between connected regions via portfolio effect.
Portfolio effect is true if regional peak load is not at the same time, and it is highest when regional load figures are not correlated.
For example between countries with lower winter peak (DE) and summer peak (IT).
Gross Electricity Consumption in TWh로 Yearly average hourly load in GW 구하는법?
TWh/ hour = TW니까
TWh/ 8760hours * 1000 = GW나옴
Energy transition의 의미?
- politically driven
- energy system to a sustainable one
Firm capacity란?
providing capacity whenver needed, especially in times of peak load
Flexibility란?
providing necessary ramps to balance short-term demand changes + forecast errors, plant outages
Wind capacity credit in % of installed capacity?
1% - 6%, hypothetically 14% (when wind and load are redistributed over Europe)
Classical power plant fleet seperated in 3 groups
- base load plants: must-run, nukes, lignite, CHP (combined heat and power)
- mid merit plants: hard coal
- peak load plants: gas, oil, PSP (pumped storage plants)
Residual load (RL)?
load - PV production - wind production
Inertia?
And why wind turbine does not provide inertia?
Conventional power plants provide inertia via heavy rotating equipment such as steam turbines and gas turbines, driving & rotating generators.
The stored energy in the rotating mass of conventional power plants prevents for heavy very short-term frequency drops and gives the system the necessary seconds to react, by activating the traditional frequency control reserve.
Wind –> frequency converter between the wind turbine and electricity grid prevents the kinetic energy of the wind turbine’s rotating mass from providing inertia during periods of frequency change.
Close-down of conventional power plants —> countermeasures for grid stability?
- fast frequency response provided e.g. by batteries:
activation in some 100ms and full activation in <=1s. - synthetic inertia provided e.g. by batteries with so-called grid forming inverters
Wholesale market 정리
*정의: electricity is traded prior to its supply to end customer. = ‘sales for resale’ market.
*Completion: physical (delivery in the accounting grid) or financial (e.g. options) transactions
*Maturity:
- spot: delivery next day “day ahead”, next hours “intraday”
- forward: delivery in future - year, quarter, month
*Products:
- schedule: no standardized product
- spot: hourly DAH, quarter hourly ID products, block of hours
- forwards: base, peak
*Marketplaces:
- stock exchange (spot or forward)
- OTC brokered or bilateral
Clean, dark spreads 와 RES deployment가 무슨 상관?
The clean spark/dark spread reflects (or at least has been seen in former times
with small RES penetration as) the theoretical marginal income of a gasfired/coal-fired power plant.
왜냐면 수식이 base price - fuel cost - co2 cost인데, base price 의 풀 자체가 작아졌으니까.
예전에는 spark spread가 peak price보다 50 높으면 거래하겠다 말할수 있었는데 지금은 base load자체가 낮기 땜에 의미가 퇴색됨.
Indicators for price volatility
- daily highest- lowest price difference
- mean absolute deviation ‘e’
- variance s’^2
- standard deviation ‘s’
*variation coefficient ‘v’ = s / x
–> percentage of the standard deviation against the average. inflation 땜에 3% 오르면 분모 분자 다 3%씩 오른값이니까 inflation factor 제거하고 고려할 수 있음.
- base - peak load spread in euros or in percentage
- number of price peaks (>300, 150, 75 euros) per year
- number of negative prices per year
Balancing energy 개념
Generation이 많아져서 50Hz 넘어가면 positive balancing energy is used. 반대는 negative balancing energy is used.
max deviation은 1 Hz.
Deferrable load provision의 개념 설명
- 지금은 terminated. 예전에 TSOs were obliged to run weekly tenders for deferrable load (max 3 GW). TSO가 줄이라면 줄일 수 있는, 그리고 MV 나 HV에 연결된 one or more power consumers 대상.
- Double marketing 가능: deferrable load provision and ancilary service market 둘다참여 가능. 다만, DAH 가격이 200EUR/MWh 이상일때만 capacity price grant 가능.
- 참여자 min 5MW, 대응은 350ms 자동대응 또는 15분 내에 TSO가 제어할 수 있음.
- min availability 82% 유지 during the given duration (min. 4.5h - max 32.5h, 일주일에 한번은 16.5h at a stretch) 의무. unavailabilities have to be reported.
- capacity price max는 500EUR/MW, energy price max 는 400EUR/MWh.
Energy market과 capacity market의 의미
Energy only market에서 power plant의 유일한 income stream은 energy market임. capacity market opens an additional income stream: the power plant operators are paid for the provision of firm capacity.
근데 energy only market에서는 peak load때 price peaks를 감당해야 하고, capaciy market은 capacity price가 나가니까 결국 result는 이론적으로 똑같다.
다른말로 하면 capacity market 디자인은 forecast of peak demand를 기반으로 한다는 것.
Proponents of capacity markets argue that CM income provides higher countability for power plant operator compared to erratic price peaks.
Opponents aregue that market players can deal with stochastic price risks.
Capacity market - key design features
- Demand quantity: secretary of state fixes capacity target (= required capacity to meet a loss of load expectation of 3 hours per year). Target amount to be split into t-4 and t-1 auction.
- Supply quantity: bidder nominates its own connection capacity. This numbre will be de-rated centrally.
- DSR: t-1 auction 은 DSR capacity를 위해 중요하다 (t-4에 참여하기는 어려운데, active participation을 장려하려면)
- Auction frequency: Will be run over 4 days with 4 rounds per day. Price decrements 5GBP per auction round. Bidder has to declare whether price taker (bid below defined threshold) or price maker.
- Contracts: new plants 는 15년, existing plant는 1년, refurbished plant는 3년.
- Secondary market: physical trade of obligations 는 delivery 1년 전부터 가능. (precondition: additional unencumbered pre-qualified capacity). Private financial hedging은 at any point 가능.
- Delivery and penalties:
- successful bidders are obliged to ‘load following’ (when a stress event, i.e. the total demand is at 70% of anticipated peak, they have to deliver 70%).
- capacity market warning is issued at least 4 hours in advance of any anticipated stress event by system operator.
- penalties are capped at 200% of monthly payments and up to 100% of annual payments. - Payment:
- cost of capacity recovered from suppliers according to their share of peak demand. (전력공급자에게 전가됨. peak demand에 사용하면 더 많은 비용을 proportionally 지불하도록. 결국 최종소비자가 내는돈)
- penalties returned from capacity providers to suppliers according to their share of peak demand. (이것도 전력공급자에게 전가된다는 뜻. peak demand를 커버하기 위해 비용을 썼을테니 그걸 compensate 하는)
CONE at capacity market?
Cost of New Entry (net-CONE)
key anchor point for the CM demand curve, by providing an estimate of CM revenue requirements of a new entrant.
therefore, setting the level of net-CONE requires: refernece technology (i.e. the likely new entrant technology of choice), costs of this technology and its expected operating performance.
Market premium (FiP) 산출 공식
MP = AW (maximum remunerataion) - MW (monthly market value)
DSO component?
If too many RES-E installations (exceeding the maximum load), a county is a DSA development area.
DSO component xx ct/kWh Wind and PV are added to the bidding value for projects in these areas.
Grid parity?
석탄발전과 신재생 발전비용이 같아지는 시점.
Point in time at which a decentral technology located directly with the customer can produce electricity for the same cost as customer’s electricity retail tariff.
If grid parity is reached, a successive market penetration of the new technology for prosumers would be expected.
But this is just true, if:
1. taxes and charges can be at least to a large extent be indeed avoided (often not the case)
- the decentral production technology allows for a high own consumption share (with intermittent sources like PV not the case)
Household, industry electricity prices 증가의 가장 주된 요인
increasing charges, levies and taxes
–> 그러므로 optimization of self consumption gets increasingly attractive.
PV self consumption?
possibility to connect a PV with a capacity corresponding to their consumption, to their own system or grid, for their own or for on-site consumption and feeding the non-consumed electricity to the grid and receiving value for it.
Net metering?
A simple biling/calculation arrangement that ensures consumers who operate PV systems receive credit for any electricity their systems generate and inject to the grid in excess of the amount consumed within a biling/calculation period.
PV Gen 1000kWh - 내 consumption 1000kWh = 내 소비는 0kWh입니다 가 net metering.
excess를 다시 grid로 보내는게 독일은 불가능.
Seven voltage levels?
- Maximum
- Maximum with transformation to high voltage
- High
- High with transformation to medium
- Medium
- Medium with transformation to low
- Low
Each of them has different, individually calculated grid charges.
Economics of peak shaving?
capacity payment는 연단위로, peak load * capacity price로 부과된다.
즉, peak load 1MW 줄일때마다 capacity price 단위만큼 절약할 수 있는 것.
Modern portfolio theory?
Every possible asset combination can be plotted in a risk-return space, 젤 중간이 MVP (mean-variance portfolio).
오른쪽으로 치고나가는 부분을 efficient frontier라고 하고,
왼쪽으로 꺾여나가는건 inefficient.
(x축 standard deviation, y축 value 그래프에서 선반형)
Post-modren portfolio theory - downside risk?
(target - return)^2 적분한담에 log 그래프… 곱해서 루트씌운값. random values의 variance 누적.
LPM, lower partial moment 라고 부르기도 함.
x LPM y return으로 그래프그리면 mean variance는 수직으로 오른쪽, downside risk는 수직으로 왼쪽에 위치.
CAPM
capital asset pricing model
1) pricing an individual security or a portfolio.
2) enables the calculation of reward-to-risk ratio for any security than 마켓전반적 수준. x축에 베타, y축에 expected return으로 그래프그리면 x=0지점이 risk-free rate.
- Security market line (SML) and its relation to expected return and systematic risk (beta).
** when the expected rate of return is deflated by its beta coefficient, the reward-to-risk ratio for any individual security in the market is equal to the market reward-to-risk ratio. (beta땜에 줄어들면 market으로 인한 risk premium이 없다)
Beta?
Cov(Ri, Rm) / Var(Rm)
Sensitivity of the asset returns to market returns
CAPM 수식
Rf + b * ( (E(Rm) - Rf)
Derivatives
Instruments to manage the price risk.
Value of the derivative is derived from an underlying asset.
Forward / Option으로 나뉨
Forward 의 특징
Non-confidential
Obligation to buy/sell the underlying asset
High flexibility
Credit risk
Option의 특징
Confidential
항상 exercise 되는건 아님
Short? Long? position
Short - seller
Long - buyer
Contango and backwardation?
Contango: price p > actual spot price
Backwardation: price p < actual spot price
Futures 특징
1) standardized contracts
2) high fungibility, liquidity
3) daily valuation (mark-to-market)
4) In large part, futures contracts do not result in a physical exchange of the commodity <–> forwards
–hence, serve mainly for financial hedging of futures transactions
5) low credit risk
6) inflexible
Futures short position 그래프 그려보삼
x 축은 spot price at maturity date
y 축은 P&L
그럼 straight line with slope -1
(이미 정해진 가격으로 팔거니까 만기 때 가격이 오르면 seller는 손해인것)
_________________ 는 daily clearing이니까 fluctuates
_________________ 는 ex ante defined price니까 대신 counterparty risk.
futures
forwards
futures on commodities에서, cost of carry “u”란?
storage-, financing-, insurance and potential transport costs during the contract duration
futures on commodities에서, convenience yield “y”란?
advantage you have by owning the physical good in comparison to the ownership of a corrdsponding futures contract.
e.g. 가스는 demand seasonality가 심하니까 low capacity of storage는 higher convenience yield 를 유도함.
hedging strategy는 futures or forwards?
fluctuating futures!
futures hedging에서 short, long position 설명
short hedging은 더 잃기전에 p > spot price
long hedging은 더 올라가기전에 p < spot price
call/put, long/short
call/put은 option (권리)이고
long/short은 position.
long put 하면 buyer의 seling option
short call하면 seller의 buying option
call - buying, put - selling (cb ps)
call, put option 을 SP, EP에 따라 분류
Spot price, Exercise price
옵션행사가가 Spot 보다 낮으면 (SP > EP),
call option은 살권리니까 in the money
put option은 팔권리니까 out of the money
Total value of the option?
Intrinsic value + time value
intrinsic value: value to which an option is in the money, value of an option if it’d be excercised immediately
time value: value resulting from the fact that the option could develop deeper ‘into-the-money’ until T
Swap?
Bilateral, private, contract fixing the exchange of future payment flows (no delivery of any physical good).
Basic form = Plain-Vanilla Swap (‘floating’ price 1개)
- Short-Swap: Bought to hedge against price
decrease
- Long-Swap: Bought to hedge against price
increase
Other forms: floating-for-floating swap (floating price 2개이상)
Agent-based modelling?
computer simulations used to study the interactions between people, things, places, and time. They are stochastic models built from the bottom up meaning individual agents (often people in epidemiology) are assigned certain attributes.
e.g. traffic jam이 어떻게 발생하나 시뮬레이션
stochastic?
통계학적인
price caps, floors의 옵션적 의미
price caps: increasing 방지니까 a sequence of different long call options
price floors: decreasing 방지니까 a sequence of different long put options
basis risk (correlation risk)?
- product risk: underlying is not 100% identical to the physical commodity which has to be hedged
- temporal: trading period of the futures contract is not identical to the period of the physical trade
- locational: Prices of a commodity can vary between different regions. In the energy sector the locational basis is of relatively high importance because transport often is very expensive (i.e. electricity, natural gas)
Properties of electrical energy networks - degree of intermeshing: meshed network vs. unmeshed network?
Meshed (v=1.5)
Power supply security: high
Investment cost: high (Cable 많음)
Losses: low
Protection: complex
Voltage stability and quality: high
Network restoration after blackout: complex
Unmeshed network of v<1
Power supply security: lower
Investment cost: lower
Losses: higher
Protection: simpler
Voltage stability and quality: lower
Network restoration after blackout: simpler
Sector coupling 예시들기
- power to heat: flexible CHP
- power to gas: storage technology
- power to gas: electricity storage
- power to gas: heat storage
- power to gas: fuel for electricity
- electromobility
- power to liquid: fuel for electricity
Technical structure of German and European power supply system (by feed-in / consumer / corresponds to)
Feed-in / Consumer / Corresponds to
- Transmission grid (220/380kV), power plants 200/1600MW — Highest voltage (neighbor grids) — Autobahn
- Trans-regional distribution grid (60/110kV), power plants 20/200MW — High voltage (large-medium scale indsustry — Federal roads
- Regional distribution grid 1/60kV, power plants 0.5/20MW — Midium voltage, small scale industry — community roads
- Local distribution grid 230/400V, power plants <0.5MW — low voltage, trade and business households — play streets
inverter, rectifier 차이
inverter: DC –> AC
rectifier: AC –> DC
Balancing market 구분
Frequency Containment Reserve (FCR) = primary reserve, 30s
Automatic frequency restoration reserve (aFRR) = secondary reserve, 5 min
Manual Frequency Restoration Reserve (mFRR) = tertiary reserve, 12.5min
Possibily RR (depending on dispatching approach of specific TSO), 60min
Offshore wind planning - HVAC, HVDC SLD 나열
HVAC (220kV)
HVDC symmetric monopile (320kV)
HVDC symmetric bi-pole with metallic return (525kV)
HVDC rigid bi-pole
HVDC rigid bi-pole with bypass
New technologies supporting grid operation?
Curative operation will play an important role.
i.e.counter-measures need also to be initiated after the failure. This requires additional SCADA and EMS functions, esp,
Closed loop functions, e.g.the SCOPF (Security constrained optimal power flow (SCOPF) for integrated contingency analyses) can automatically activate remedial actions like phase-shifting transformers (PSTs - voltage가 같은 transformer just to control reactive power) or grid boosters (grid stability 위해 자동으로 참여하는 large scale ESS들. electrolyzer gen과도 연관가능)
