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 extensive experience of both the capacity market and CfD regime. We have provided the model used to set the capacity target for each auction, the model used by the CfD counterparty to determine supplier charges, and models which have supported design decisions for both schemes. 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 help our clients:

  • Understand the requirements for participating in the capacity market or CfD regime
  • Understand how the schemes will evolve over time and the effect of the ongoing changes to their design
  • 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
  • Develop strategies to minimise and manage penalty risk
  • Incorporate Capacity Market and CfD modelling within the client internal modelling framework

Our models are updated regularly to ensure they reflect the latest policy and market developments. Our recommendations are the result of tailored modelling solutions and in-depth understanding of government policies.

How we have helped our clients

Generation assets valuation

Generation assets valuation

How LCP specialists delivered bottom-up modelling of the electricity market to assess investment dynamics in a reformed energy market.

Our Capacity market & CfD advice experts

Explore our solutions

Bespoke model development

Developing bespoke modelling solutions to supplement in-house analysis to suit the client’s needs.

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Energy market forecasting

From projections for individual power plants to assessing market scenarios for wholesale prices, security of supply and emission analysis.

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Energy policy studies

Insight into how the changing policy environment can impact businesses and evidence-based recommendations to address policy uncertainties.

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Generation asset valuations

Evaluation of investment decisions taking into account all aspects of the energy market.

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Independent reviews

Independent reviews, quality assurance and benchmarking of in-house energy models to avoid the risks that complex and opaque analysis can pose.

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