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Energy analytics

Capacity market
& CfD advice

The increasing share of renewable and low carbon sources, incentivised through market subsides, has led governments around Europe to introduce capacity markets.

Capacity markets are required to ensure that an adequate level of capacity is available in the future to keep the lights on.

In Great Britain, Capacity Market and Contract for Difference (CfD) auctions have been introduced through the Electricity Market Reforms (EMR). The introduction of these policies has altered the nature of investment and understanding and forecasting auction outcomes is now a key driver for the success of investors.

How we can help

We have been closely involved in the development and operation of these key policy mechanisms.

For the Capacity Market, we provide the model used by National Grid to recommend the capacity requirement and calculate the Equivalent Firm Capacities (EFCs) for each auction.

For the CfD regime, we provide the CfD counterparty (the Low Carbon Contracts Company) with the models they use to determine supplier charges and the levels of their reserves.

Using this experience, we support a wide range of industry participants including independent generators and energy suppliers throughout each stage of auction participation, from pre-qualifying assets to understanding the effect on portfolio profitability.

 We can:

  • Support bidding strategies, including auction war game simulations
  • Provide projections of how generating assets could be affected, including the impact on the wider energy market
  • Understand the impact of the ongoing changes to the market design
  • Provide you with models to use in-house in simulated possible CM and CFD auction outcomes.

How we have helped our clients

Storage Capacity Market deratings

Storage Capacity Market deratings

LCP were commissioned to support National Grid in modelling the contribution of limited duration storage plants to system security. This work was ultimately used to inform the de-ratings for different durations of storage in the capacity mechanism.

Wind & Solar Capacity Market deratings

Wind & Solar Capacity Market deratings

In 2018 National Grid commissioned LCP to develop an approach to calculating the incremental EFCs (equivalent firm capacities) for wind and solar plants, with a view towards setting deratings for their participation in future capacity auctions.

Our Capacity market & CfD advice experts

Explore our solutions

Bespoke modelling solutions

We can help our clients with a wide range of issues from whole system modelling to individual power plant and policy impact analysis.

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Commercial and operational optimisation

We advise on the optimal dispatch of assets within the wholesale market, forward planning of maintenance activities and valuation of commercial upgrades to plant.

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Irish market support

We work extensively in the Irish market, providing market modelling and analysis to investors, generation owners and governments.

Irish market support
Energy market forecasting and scenarios

We provide detailed forecasts of the GB and Irish power markets, using our EnVision modelling framework. This can provide both short-term and long-term forecasts of all key system metrics, from system wide to individual assets.

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Policy impact studies

Our understanding of market dynamics and modelling experience allow us to offer evidence-based recommendations on complex policy and regulatory issues that allow fully informed decision-making.

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Transaction support and generation asset valuations

We combine bottom-up unit-level modelling with market and policy insights to quantify the value and understand the risk associated with any generation asset. 

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