Megawatt gorging data centers, massive new battery storage, electrification, fossil-fuel and nuclear renaissance, regulatory relief – such are the stuff that project developers’ dreams are made of. But in a landscape of political, economic, and regulatory flux, choosing the right path forward is complex. Things can change quickly. Whether you’re using forward curves generated from an internally developed model or a third-party product, if they are not carefully vetted and refreshed often their use can result in unacceptable levels of risk.
Investment-grade forecasts require high-quality data, best-in-class modeling and simulation technology, timely forecast updates and most importantly, the curation of realistic scenarios to feed the models. Scenarios consider project fuel costs, generation mix, load growth, the impact of policy changes and other related market projections for a specific time frame. Reliable forecasts that allow developers and investors to proceed with confidence should include the following steps:
- Start with a current state, asset-level view of generation, transmission, and local demand.
- Forecast changes in policy, demand, generation, transmission, technology, weather, and macro factors.
- Develop alternative scenarios for each ISO region being considered, compare previous results with actual market data and calibrate your scenarios.
- Run capacity expansion and production cost optimization models and analyze outputs for grid reliability and benchmarks.
- Analyze outputs for grid reliability and benchmarks (iterate as needed)
- Repeat this entire process every quarter.
It is also important to make sure your results are completely transparent. Forecasts generated from a black box inspire little confidence. Implementing the six steps noted will result in manageable risks and lead to a successful project.
PowerIntel’s forecast scenarios are designed to span expected market conditions to identify financial risks. Our scenarios and forecasts are curated and validated by the leading brains behind the original design of today’s ISO market structures, as well as Locational Marginal Pricing (LMP) and Locational Marginal Emissions Rates (LMER). Market expertise and experience are crucial throughout the entire process. Our experts have been studying and tracking these markets for nearly 30 years.