EconPapers    
Economics at your fingertips  
 

Reinforcement Learning in Energy Finance: A Comprehensive Review

Spyros Giannelos ()
Additional contact information
Spyros Giannelos: Department of Electrical and Electronic Engineering, Imperial College London, London SW7 2AZ, UK

Energies, 2025, vol. 18, issue 11, 1-42

Abstract: The accelerating energy transition, coupled with increasing market volatility and computational advances, has created an urgent need for sophisticated decision-making tools that can address the unique challenges of energy finance—a gap that reinforcement learning methodologies are uniquely positioned to fill. This paper provides a comprehensive review of the application of reinforcement learning (RL) in energy finance, with a particular focus on option value and risk management. Energy markets present unique challenges due to their complex price dynamics, seasonality patterns, regulatory constraints, and the physical nature of energy commodities. Traditional financial modeling approaches often struggle to capture these intricacies adequately. Reinforcement learning, with its ability to learn optimal decision policies through interaction with complex environments, has emerged as a promising alternative methodology. This review examines the theoretical foundations of RL in financial applications, surveys recent literature on RL implementations in energy markets, and critically analyzes the strengths and limitations of these approaches. We explore applications ranging from electricity price forecasting and optimal trading strategies to option valuation, including real options and products common in energy markets. The paper concludes by identifying current challenges and promising directions for future research in this rapidly evolving field.

Keywords: reinforcement learning; energy finance; option value; stochastic optimization; machine learning; risk management (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/1996-1073/18/11/2712/pdf (application/pdf)
https://www.mdpi.com/1996-1073/18/11/2712/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jeners:v:18:y:2025:i:11:p:2712-:d:1662884

Access Statistics for this article

Energies is currently edited by Ms. Agatha Cao

More articles in Energies from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().

 
Page updated 2025-05-24
Handle: RePEc:gam:jeners:v:18:y:2025:i:11:p:2712-:d:1662884