IM8 · Commodity Instrument Engineering

Physical Optionality & Asset-Backed Instruments

Value the flexibility. Respect the constraint. Optimise the asset.

Master physical optionality and asset-backed instruments: swing and storage, transport and pipeline capacity, LNG optionality and diversion, tolling and generation, heat-rate structures, PPAs, interruptible contracts, nomination flexibility, take-or-pay and make-up rights - valued as dynamic optimisation under operational constraints rather than as a static payoff.

Swing & storage · Capacity · LNG optionality · Tolling & heat rate · PPAs · Take-or-pay · Optimisation

Enrol or enquire See the 100 chapters

100 chapters · 10 modules · multi-commodity · one continuous instrument estate

How it is built

Design it, book it, value it, risk it, operate it, implement it

100 chapters does not mean 100 definitions. This programme follows the academy's standard ten-module architecture, so the instrument is taken from first principles through to a working CTRM representation, using the same structure as every other programme in the academy.

Worked cases run on NorthStar Global Commodities, a fictional instrument book created for teaching. It does not describe any real firm, person or transaction.

Curriculum

10 modules · 100 chapters

M0 Physical Optionality Foundations Ch 1-10 · 10 chapters
  1. What Physical Optionality Actually Is
  2. Financial Optionality vs Operational Optionality
  3. State, Decision and Transition
  4. Intrinsic vs Extrinsic Value
  5. Operational Constraints as Economic Terms
  6. State Variables in Physical Commodity Options
  7. Feasible Action Space
  8. Path Dependency and Opportunity Cost
  9. Physical Optionality Lifecycle
  10. NorthStar Physical Optionality Estate
M1 Swing & Flexible Supply Contracts Ch 11-20 · 10 chapters
  1. Swing Contract Fundamentals
  2. Daily Minimum and Maximum Quantity
  3. Annual Contract Quantity
  4. Take-or-Pay Optionality
  5. Make-Up Gas and Carry-Forward Rights
  6. Swing Exercise Economics
  7. Bang-Bang vs Interior Exercise
  8. Swing Penalties and Constraint Breaches
  9. Swing Contract Mark-to-Market
  10. Swing Optimization Lab
M2 Gas Storage & Inventory Optionality Ch 21-30 · 10 chapters
  1. Gas Storage as an Option
  2. Inventory Bounds
  3. Injection and Withdrawal Rates
  4. Injection Fuel, Losses and Variable Costs
  5. Ratchets
  6. Storage Intrinsic Value
  7. Storage Extrinsic Value
  8. Storage Terminal Conditions
  9. Storage Hedge Strategy
  10. Storage Valuation Lab
M3 Transportation, Pipeline & Capacity Optionality Ch 31-40 · 10 chapters
  1. Transportation Capacity as an Instrument
  2. Firm Pipeline Capacity
  3. Interruptible Transportation
  4. Entry/Exit Capacity
  5. Pipeline Nomination Optionality
  6. Fuel, Shrinkage and Transport Charges
  7. Multi-Route Transportation Optimization
  8. Capacity Release and Secondary Trading
  9. Transport Capacity Risk
  10. Pipeline Capacity Optimization Lab
M4 LNG Cargo & Logistics Optionality Ch 41-50 · 10 chapters
  1. LNG Cargo Optionality Fundamentals
  2. Destination Flexibility
  3. Diversion Rights
  4. LNG Shipping Economics
  5. Boil-Off Gas and Cargo Quantity
  6. Loading and Discharge Window Flexibility
  7. Regasification Capacity Optionality
  8. LNG Netback Optimization
  9. LNG Portfolio Re-Optimization
  10. LNG Optionality Lab
M5 Power Generation, Tolling & Dispatch Optionality Ch 51-60 · 10 chapters
  1. Power Plant as a Real Option
  2. Spark Spread and Dispatch Economics
  3. Heat Rate
  4. Tolling Agreements
  5. Startup and Shutdown Costs
  6. Minimum Run and Minimum Down Time
  7. Ramp Rates
  8. Generation Availability and Outages
  9. Generation Dispatch Optimization
  10. Tolling & Generation Lab
M6 PPAs, Renewable Assets & Flexible Demand Ch 61-70 · 10 chapters
  1. Power Purchase Agreement Fundamentals
  2. Fixed-Volume vs Pay-as-Produced PPAs
  3. Baseload and Shaped PPAs
  4. Contract-for-Difference PPA Structures
  5. Renewable Generation Uncertainty
  6. Capture Price and Cannibalization
  7. Imbalance and Shape Risk
  8. Renewable Certificates in PPAs
  9. Flexible Industrial Demand
  10. PPA & Flexible Demand Lab
M7 Battery, Multi-Asset & Portfolio Optimization Ch 71-80 · 10 chapters
  1. Battery Storage Economics
  2. State of Charge
  3. Round-Trip Efficiency
  4. Charge and Discharge Rate Limits
  5. Battery Degradation
  6. Multi-Market Battery Optimization
  7. Co-Located Renewable and Battery Assets
  8. Gas-Power-Carbon Portfolio Optimization
  9. Portfolio Shadow Prices
  10. Multi-Asset Optimization Lab
M8 Stochastic Valuation, Risk & Hedging Ch 81-90 · 10 chapters
  1. Dynamic Programming for Physical Assets
  2. Curse of Dimensionality
  3. Least-Squares Monte Carlo for Physical Optionality
  4. Stochastic Dual Dynamic Programming Concepts
  5. Mean Reversion and Seasonality
  6. Price Spikes and Jumps
  7. Asset Greeks and Marginal Exposures
  8. Hedging Physical Optionality
  9. Physical Asset Stress Testing
  10. Valuation & Risk Lab
M9 CTRM/ETRM Architecture, Control & Capstone Ch 91-100 · 10 chapters
  1. Canonical Physical Optionality Data Model
  2. Operational State Store
  3. Constraint Model Architecture
  4. Optimization Service Architecture
  5. Market Scenario Service
  6. Dispatch and Nomination Integration
  7. Physical Optionality P\&L Explain
  8. Model Governance and Operational Controls
  9. Tier-1 Physical Optionality Implementation Lab
  10. NorthStar Physical Optionality Capstone
How it is delivered

Three ways to take Physical Optionality & Asset-Backed Instruments

Self-paced is a document-and-media programme with lifetime access - no live sessions. Cohort and enterprise add live instructor-led training. Mentorship is not offered in any tier.
Feature Self-paced Cohort Enterprise
Format Written chapters, video explainers and podcasts Everything in self-paced, plus scheduled live sessions Everything in cohort, delivered privately to your team
Live sessions None Scheduled, instructor-led Scheduled, instructor-led, private
Mentorship Not offered Not offered Not offered
Access Lifetime Lifetime Lifetime for every enrolled seat
Pace Entirely your own Guided schedule with a peer group Agreed with your desk
Tailoring Fixed curriculum Fixed curriculum Sequenced to your markets, systems and governance
Best for Individuals learning around a job Individuals who want structure and deadlines Desks building the same capability together
For individuals

Get the programme guide

The full chapter list, what each module covers, and how the tiers compare - sent to your inbox as a PDF.

For teams

Run this for my desk

Private delivery for your desk, sequenced to your markets and systems. Tell us the team and we will scope it.

Run this for my desk

Bring this to your desk

Download the full curriculum, or talk to us about running it for a team.

Enrol or enquire See the whole academy