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Generation
assets valuation

Energy analytics

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

Background

We have provided due diligence support and evidence-based valuations for every major generation asset class, including CCGTs, onshore and offshore wind, biomass, storage, and flexible gas.

Our solution

Our EnVision modelling framework, combined with our experience working closely with government and regulators, allows us to capture all major revenue streams, including:

  • Wholesale market revenues – this includes the impacts on wholesale prices of increasing penetration from intermittent generation, interconnection, storage and demand-side response.
  • Balancing market revenues – our modelling incorporates detailed half-hourly modelling of BM outcomes. Increasing imbalance volumes due to the rise in intermittent generation make the BM an increasingly important revenue source.
  • Ancillary services – we model the requirements and provision for certain types of service in the long term, including the challenge of operating a system with large quantities of asynchronous generation.
  • Embedded benefits and network charges – we capture these revenue streams in full detail, having provided Ofgem with the modelling to assess the wider system impacts of their proposed reforms.
  • Capacity mechanism – we simulate the capacity auctions in full detail to project future auction outcomes. We provide the system security modelling used by National Grid to calculate the annual capacity requirement and the EFCs for intermittent and storage technologies.

Where appropriate, we use stochastic analysis to capture the full range of outcomes, including “tail-end” events which can drive a significant portion of value (or risk) for certain asset classes.

We assess projects under a wide range of market scenarios to highlight key drivers of opportunity and risk.  These include uncertainties like decarbonisation and decentralisation of the capacity mix, policy changes, commodity price movements and revenue cannibalisation due to increasing market penetration.

The results

Our analysis provided clear recommendations on the profitability of flexible generation assets under different scenarios and provided the basis for the client’s investment decisions.

How we can help

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

Strategic advice aimed at maximising the benefits and minimising the risks associated with the Capacity Market and Contracts for Difference.

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

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.

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

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.

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. 

Want more information?

If you would like to know more about our services and how we can help you with Energy analytics

Contact us