Interdisciplinarity as heuristic resource for energy management

As high-tech industries continue to experience dynamic growth and problems of development in high-tech industries are getting increasingly complex, managers have to embrace the need for new competencies that match present-day challenges. This calls for a qualitative change in the architecture of education to bring it up to date with contemporary trends. Using cases from Russia, the paper aims to provide a groundwork for an interdisciplinary approach to building professional competencies in energy managers as a framework for forward-looking management of high-tech industries in a nonlinear environment. The authors identify factors that determine the new management imperative and set out methodological principles of developing a management culture. A model of professionalism in management is proposed that is the result of a complex interplay of interrelated competencies. The paper also explains the key features of an interdisciplinary training programme. To prove the research hypothesis, an analysis was conducted of empirical data from expert reviews by executives at Russian energy companies and leading academics

Unbiased investment risk assessment for energy generating companies: Rating approach

This article presents a proprietary methodological approach to the ranking of investment risks by severity level and assessment of risk impact on the investment decision-making process. Use was made of the multivariable data analysis mathematical tool, which allows the bias problem to be solved in the efforts to attain the objectives aimed at improvement of investment potential for energy generating companies. © 2017 WIT Press

Value-based approach to managing the risks of investing in oil and gas business

Development of the oil and gas business is inextricably linked to large-scale investment programs. Large-scale flow of capital funds, long duration of projects, as well as the external environment's high uncertainty for oil and gas businesses bring about the high-risk investing; and therefore, it becomes urgent to develop methodological tools for risk management issues. The authors' approach to risk management of capital investments allows an individual to estimate the risk level of an investment project on the basis of a ratings model, and to evaluate the need for capital to cover potential losses on the basis of the target level of financial stability and long-term strategy of the company. The authors' technique of RAROC (risk adjusted return on capital) analysis of investment projects allows to calculate the risk-adjusted return on investment and to carry out the selection of projects that contribute most to the creation of value and screen out those projects that destroy the company value. The results can be used by management of oil companies, investors, and analysts in financial decision-making. © 2017 WIT Press

Evaluation of investor attractiveness of power-generating companies: Special reference to the development risks of the electric power industry

The paper presents the author's methodical approach to the investor attractiveness evaluation of power-generating companies on the basis of risks development decomposition, which can calculate the value of risks in the financing of electricity capital projects. © 2014 WIT Press.International Journal of Safety and Security Engineering;International Journal of Sustainable Development and Planning;WIT Transactions on Ecology and the Environmen

Optimization of financing investments in a power-generation company

Attracting investment in the Russian energy industry is a necessary condition for improving the competitiveness of energy companies. It is important to create an investment budget financing structure, in which the weighted average cost of funds will be minimal, and the amount of resources drawn from each source to fit the current market trends and financial sustainability criteria power generation company. This paper discusses problems of investment financing optimization of a power generation company, a proposed optimization model of investment financing and calculated parameters for the optimization of the investment program in the example of a Russian power generating company. © 2014 WIT Press.International Journal of Safety and Security Engineering;International Journal of Sustainable Development and Planning;WIT Transactions on Ecology and the Environmen

Risk management of mergers and acquisitions with borrowed capital in the energy sector

Under the conditions of macroeconomic instability and the difficulty of forecasting trends in the market development, a competitive recovery of the electric power business is possible only by attracting large capital investment. Mergers and acquisitions deals that make it possible to concentrate assets and to amalgamate the industry business are done through the leveraged buy-out (LBO) scheme. However, LBO deals are associated not only with the investor's risks, but also with the risks of the acquirers and vendors. The article presents the authors' model of risks formalization of LBO deals. It allows for consolidating the blocks of key project and financial indicators, parameters of a specific risk, and macroeconomic and sectoral factors. The developed model yields an indicative assessment of the degree of risk of LBO deals taking into account the industry specifics. A mechanism for determining the position of the creditor in the framework of LBO is proposed as a practical application of this model. The results of the study can be used by the management of energy companies, investors and analysts in making financial decisions. © 2018 WIT Press.The work was supported by act 211 of the government of the Russian federation, contract no 02.a03.21.0006

Complex approach to assessment of competitiveness of power-generating companies of developing economies

The present-day trends in the economic development are characterized by both the processes of restructuring initiating investment activity and the mounting competitive pressure. These special characteristics clearly manifest themselves in the developing economies featuring low level of development of infrastructure – in the power sector in particular, and this gives rise to the development of specific forms of competition in the power-generating sphere. Finding solutions to the problems of development of energy infrastructure will be instrumental in strengthening the competitive position of the developing countries on the world market and reducing the threat of takeover. This paper presents a complex approach to assessment of competitiveness of power-generating companies in developing countries. Such an approach offers an opportunity to assess the attractiveness of current levels of investment of a company and its long-term sustainability through application of modern analytical tools. The practical aspects of the authors’ methodological approach to the assessment of competitiveness are discussed using a Russian power-generating company as an example. The proposed ideas based on revealing the most risk-bearing hazards, those of latent nature including, may serve as a methodological basis for the development of risk management programmes in the power-generating sphere, to the benefit of realization of investment projects as well. © 2018 WIT PressGovernment Council on Grants, Russian FederationThe work was supported by Act 211 of Government of the Russian Federation, contract No. 02.A03.21.0006

Risk-oriented investment in management of oil and gas company value

Capital-intensive investment projects with high level of risk are the driver of the company's value growth, but under certain conditions they may lead to a default. The financial cycle specifics of the projects in oil and gas industry related to the need for significant initial investment, as well as structural specifics of raising capital, determine the necessity of an integrated and comprehensive assessment of investment risks. The article offers the author's approach to assessing the impact of investments on the value of oil and gas business, based on RAROC (risk-adjusted return on capital) indicator. A method of an investment project-risk assessment is devised taking into account modern approaches to risk management in the industry. Proposed is a selective algorithm for making an investment decision on the basis of a double criterion index of efficiency, with due regard to the taken risks and comparison of target and unacceptable solvency. The practical focus of the research is shown on the example of investment portfolio analysis of an oil and gas company. The results of the research can be used in the process of financial decision making by management of oil and gas companies, and by investors and analysts. © 2017 WIT Press

Risk and profitability optimization of investments in the oil and gas industry

Finding an optimum ratio of return and risk of investment projects is the key problem in overcoming the unfavorable conditions of oil prices and the reduction of profitability of the oil and gas industry. Search for investment opportunities associated with the potential willingness of oil companies to raise funds in new projects, leading to the need for improved tools maximize the return of investment activity in the conditions of uncertainty and risk. In the article the authors propose an original approach which allows solving the problem of formation of a portfolio of investment projects that achieve the maximum return on the risks assumed. The approach includes a method for determining the credit quality of the investment project on the basis of probability of default. This method is based on a comprehensive multivariate analysis of the investment project. Factors model aimed at the country and regional analysis, identification of foreign exchange, operational, technological and financial risks of the project and obtaining the integral evaluation of the project credit. The approach also includes economic capital modeling based on the MV-model (Merton-Vasicek-model), allowing achievement of the target level of creditworthiness of an oil and gas company in the long run. The proposed method of estimating project profitability is based on RAROC (risk-adjusted return on capital) methodology which enables calculation of profitability of projects based on their riskiness. The results can be used by management of oil and gas companies, investors and analysts in making financial decisions.The work was supported by the Act 211 Government of the Russian Federation, contract № 02.A03.21.0006

Optimization of finances into regional energy

The development of modern Russian energy collides with the need for major investments in the modernization and renewal of generation and transmission capacity. In terms of attracting sufficient financial resources and find ways to increase, energy sector profitability and investment attractiveness of particular importance is the problem of investment financing optimizing aimed at minimizing the cost of financing while maintaining financial stability of the power companies and the goals and objectives of Russian energy system long-term development. The article discusses the problem of investment projects financing in power generation from the point of view of the need to achieve optimal investment budget. Presents the author's approach to the investment financing optimization of power generation company that will achieve the minimum cost of resources involved, taking into account the impact of the funding structure for the power generating company financial sustainability. The developed model is applied to the problem of investment budget optimizing, for example, regional power generating company. The results can improve the efficiency of investment in energy, sustainable and competitive development of regional energy systems