Energy Trading and Investing: Trading, Risk Management and Structuring Deals in the Energy Market
$29.78
Energy Trading & Investing introduces the physical markets, financial instruments, and commercial arrangements that underpin the energy business. Davis W. Edwards connects natural gas, electricity, oil, coal, and emissions trading with the infrastructure used to produce, transport, store, and deliver energy.
The book develops its framework from market fundamentals through statistics, financial options, and option pricing. It explains why location, delivery timing, weather, and operational constraints matter when analyzing energy transactions. These foundations support discussions of spread options and the use of financial models to assess physical assets and contractual rights.
Practical chapters examine electricity demand forecasting, generation economics, tolling agreements, power transmission, natural gas transportation, and storage. Solar, wind, nuclear power, and liquefied natural gas broaden the discussion to different technologies and investment structures. Throughout, the emphasis is on understanding the economic activity behind a transaction and the assumptions used to value it.
The concluding chapters introduce Value at Risk, sensitivity analysis, model risk, and counterparty credit risk. Written as an accessible introduction for readers entering the sector, this 2010 book provides a structured foundation for understanding energy trading, asset valuation, and deal analysis within the market context of its publication.
✅ What You’ll Learn
- Distinguish physical energy transactions from forward-market and financial arrangements.
- Explain how location, delivery timing, transportation, and storage influence energy pricing.
- Interpret volatility and correlation in trading and valuation discussions.
- Understand how options and spread options represent flexibility in energy contracts.
- Connect electricity demand forecasts and generation costs with power-market pricing.
- Analyze the economic logic of tolling agreements and electricity transmission trades.
- Identify the commercial functions of natural gas pipelines, storage facilities, and LNG infrastructure.
- Compare the operating considerations discussed for solar, wind, nuclear power, and electricity storage.
- Distinguish market exposure, price sensitivities, model risk, and counterparty credit risk.
💡 Key Benefits
- An integrated industry perspective: Connects physical operations with trading, investment, and valuation.
- A foundation for deal analysis: Explains how contractual rights and operating flexibility contribute to economic value.
- Clearer professional communication: Introduces the terminology used across energy trading and risk teams.
- Greater awareness of modeling limitations: Highlights the importance of assumptions, data quality, and ongoing model review.
- A structured learning path: Moves from introductory market concepts into specialized transactions and risk management.
👤 Who This Book Is For
- Beginner to intermediate readers seeking a structured introduction to energy trading and investing.
- Financial traders and analysts moving into energy commodities.
- Energy-sector professionals who want to understand the financial implications of physical operations.
- Students and early-career professionals exploring energy valuation, deal structuring, and risk management.
📚 Table of Contents
- 1.1 An Overview of the Energy Markets
- 1.2 Trading Markets
- 2.1 Natural Gas
- 2.2 Electricity
- 2.3 Oil
- 2.4 Coal
- 2.5 Emissions Markets
- 3.1 Pollution
- 3.2 Gases, Liquids, and Solids
- 3.3 Statistics
- 3.4 Financial Options
- 3.5 Option Pricing
- 3.6 Spread Options
- 4.1 Spatial Load Forecasting
- 4.2 The Generation Stack
- 4.3 Tolling Agreements
- 4.4 Wheeling Power
- 4.5 Solar Power
- 4.6 Wind Power
- 4.7 Nuclear Power
- 4.8 Electricity Storage
- 5.1 Natural Gas Transportation
- 5.2 Natural Gas Storage
- 5.3 Liquefied Natural Gas
- 6.1 Value at Risk
- 6.2 Deltas, Gammas, and Other Greeks
- 6.3 Model Risk
- 6.4 Counterparty Credit Risk
Energy Trading and Investing: Trading, Risk Management and Structuring Deals in the Energy Market By Davis W. Edwards
| Author(s) | |
|---|---|
| Product Type | Ebook |
| Format | |
| Skill Level | Beginner to Intermediate |
| Pages | 398 |
| Publication Year | 2010 |
| Delivery | Instant Download |
21 reviews for Energy Trading and Investing: Trading, Risk Management and Structuring Deals in the Energy Market
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Sienna Zhang (verified owner) –
Great introduction to the Energy market with bias towards the US power generation industry. Would have liked some of the maths concepts to have been elaborated on with slightly more indepth examples.
Kassidy Silva (verified owner) –
Must read ! For those interested In Energy Products this is the perfect book. Well written the author has a real skill for clarity
Luka Gilbert (verified owner) –
Well written book and a good high level introduction to the energy markets without getting into too much mathematics.
One negative about this book, however, is that it is heavily centred around North American energy markets (US in particular) and makes little to no connection with international markets.
Kimora Montgomery (verified owner) –
The book is in great. I recommend it to anyone who is interested.
Anne Montgomery (verified owner) –
A great introduction to the energy market from both the physical and financial perspective. It could do with an update as it is very focused on the USA but contains nothing of the recent shale boom. I think it is a touch light on explanation in a few areas, it would be nice if it had a little more depth around ‘the Greeks’, VaR and option valuation.
Eve Arnold (verified owner) –
Agree that this is a bit textbook like. Focus is on American markets but still a good overview of functionality of markets. Things have since moved on, but the main concepts are still there.
Sterling Farrell (verified owner) –
I read this book to learn about risk, mostly, and I did learn a little about risk; however, most of what I learned was about energy generation and the relationships between natural gas, natural gas transportation, weather, electricity generation and electricity usage patterns. The book is well written and easy to understand. I would not be confident investing in energy after only having read this book, but if I was already an investor this book would give me some great insights into natural gas, electricity and their relationship together.
Harmony Woodward (verified owner) –
Beautifully and simply written book.
A must for us in the oil & gas business and for who are curious about the energy business
Nicely written for a novice to read and understan
Summer Barton (verified owner) –
I am almost half way through this book and am really enjoying it. The topics are defined well and the writing is easy to read, which is not always the case with technical subjects. I have a background in electricity markets, so some of the material is not new to me, but I can vouch for its accuracy and clarity in explaining certain topics that are somewhat complicated.
Jeremias Henry (verified owner) –
My family has been in the energy industry for 3 generations. I have an excellent grasp of the supply side of the oil and gas industry. However, I was lacking insights on the consumption side and in particular, where things are heading in the future. The author does an excellent job of giving an overview of all the different ways we produce (and consume) energy and what are the advantages (and disadvantages) to each energy source.
The book isn’t a crystal ball to where the energy industry is going. Instead, it wisely chooses to educate the reader to the most likely scenarios of things to come, provided that the reader can think for himself and therefore profit from a variety of scenarios.
Cassius Hanna (verified owner) –
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!
Cynthia Higgins (verified owner) –
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.
Rivka Villarreal (verified owner) –
I like this style of writing as it is clear and concise. It is also structured so that you can focus in on your relevant sub-topics and written clearly and in a fashion appropriate for those looking to enter the space.
Roman Robertson (verified owner) –
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.
Simone Davila (verified owner) –
Intersting
Grey Hodges (verified owner) –
This book is probably the best energy primer I’ve come across. From covering the actual physical technologies to derivatives and how it’s all connected, this book really drives it home.
Maximiliano Mason (verified owner) –
This is a broad, multidisciplinary topic and Mr. Edwards book takes the approach of making this book “a mile wide and an inch deep.” If you knew nothing about the various technical and financial sides of the business, you would learn a lot from this book. But then, why would you gravitate to this book if you didn’t already have some background? I feel like both finance types and engineering types will come away with a few good nuggets, but also a bit disappointed at the lack of depth.
Jocelyn Sheppard (verified owner) –
During my last year of studies as an undergraduate, I bought and consumed Davis’s publication due to my interest in the energy sector. The information he presented is clear, concise and accurate. I found his approach to be refreshing for someone with no previous industry experience or knowledge. He avoids technical jargon and presents the often complex information as simply as it is able to be presented. Through the knowledge gleaned from his work, I am fortunate to have been offered a position as an hourly energy trader in the MID-c region. Though I would’ve enjoyed more specific information on bilateral markets, I enjoyed all the relevant RTO / ISO information.
Nayeli Kim (verified owner) –
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.
Trent Ayers (verified owner) –
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.
Nikolai Cross (verified owner) –
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.