ESAI Power’s energy model and forecast methodology is based on power market fundamentals. We closely monitor forward curves and granular, detailed transactional activity from our monthly Generation Asset Monitor Database. We explain why our fundamental view may be different from forward curve quotes or specific transactional activity in the capacity markets. ESAI Power’s long-term market forecasts are distinguished from other power market forecast services by our four key strengths.
When forecasting the supply curve, ESAI’s proprietary Generation Asset Monitor Database provides our analysts with unique insights into the details on power generation projects in the queue, upcoming plant retirements, and power plants at-risk of retirement due to the regulatory environment or economic feasibility. Our deep understanding of PJM, NYISO, ISO-NE & MISO and our clear and transparent presentation of our forecasts, underlying assumptions, and market dynamics, help companies clearly understand the range of likely scenarios to inform their investment and trading decisions. ESAI Power provides annual and monthly granularity (on- and off-peak, 7×24) in our reports and published outlooks.
Detailed Fundamental Inputs
ESAI Power projections are based on a high level of detail in our fundamental inputs. Our energy models compute annual prices on an 8760-hour basis under full security-constrained dispatch, like the ISO/RTO models.
- Heat Rate, Output Specs & Transmission Grid Constraints ESAI’s energy models include all details that impact prices on the grid. For example, every power plant in our model has heat rate and output specs (and others) that have been vetted for accuracy against past reported performance. The transmission grid representation and constraints are all accurately modeled (can provide both zonal & nodal detail).
- Gas Basis Pricing & Emissions Costs
Additional inputs that impact generation costs are developed in-house. For example, ESAI projects gas basis pricing at approximately 15 locations in the Northeast. We also model emissions costs (e.g., CO2, SOx, and NOx) that affect generator bid profiles. - Detailed Generation Project Outlooks
ESAI’s proprietary Generation Asset Monitor (GAM) database provides outlooks on the probability of completion for all generation projects in development and under construction in PJM, NYISO, ISO-NE & MISO including all renewable projects. Retirement announcements, and power plants that ESAI deems at risk of retirement are also factored into our outlooks. ESAI’s fundamental outlooks are based on a very high level of detail with attention to accuracy.
Assessment of Risks
We publish base case outlooks based on assumptions that, based upon our experience, are the most probable outcomes. However, there are many risks on the horizon that can alter price outcomes. ESAI Power can assist with assessing these risk outcomes via our analyst access service to entertain questions and impacts of changing assumptions or building out sensitivities cases as part of an advisory or consulting project.
Transparency of Forecast Assumptions
We are not a black box in terms of our thought process. ESAI ensures that the assumptions behind our outlooks are always clear, available, and well-presented in our research coverage and market updates. This allows clients to agree/disagree with the assumptions and weigh the potential impacts on power prices moving forward. ESAI supports clients with sensitivities if needed.
For example, we may assume that very little offshore wind will get built in NYISO, whereas the client’s internal outlook may deem that a lot of offshore wind will get built. We can help bridge the gap on pricing outcomes between these two outlooks for offshore wind. In contrast, many national forecast providers have forward curves that are just market quotations based on the bids and offers of market participants and therefore, the assumptions behind the forward curves are opaque, and thus less useful.
PJM, NYISO, ISO-NE & MISO Expertise
Our team has a deep knowledge of the New England, New York, PJM and MISO power markets, having focused on these ISOs for many years. We understand the nuances of market rules and regulations and how changes will affect price outcomes.
ESAI Power’s senior analysts have been involved in the Eastern U.S. power markets since the start of deregulation 25 years ago.
Our market outlooks and briefings provide detailed updates on current market dynamics and upcoming supply and demand shifts, regulatory changes or developing market rules that could change pricing outlooks. This is backed up by direct ‘analyst access’ where clients receive additional color on market outlooks and request market update meetings to present ESAI’s latest views to investors and management.
Long-Term Price Forecasting Methodology
Energy Asset investment and power trading decisions should always be based upon fundamentally sound inputs and detailed project outlooks. While the demand side of the equation for energy asset valuations and energy pricing is relatively straightforward, getting the supply side data correct relies upon a detailed and accurate tracking of generation projects in the Interconnection Queues, updates on project financing and permitting, to help inform the likelihood of project completion, as well as detailed assessments of power plant retirements and those plants that ESAI deems at-risk of retirement. Supply forecasts also require a broad understanding of how transmission, emissions, and renewable energy mandates may impact new builds and retirements, and thus capacity and energy price outcomes.
ESAI’s Benchmark Energy Research Coverage Areas
ESAI Power’s coverage of the Capacity markets is led by our flagship Capacity Watch report. Wholesale power market participants count on this publication as the forward curve to inform their investment and business decisions in PJM, NYISO, ISO-NE and MISO. Visit our Capacity page to learn more about our capacity coverage.
ESAI Power’s Energy Watch report includes reviews of market conditions, granular forecasts of pool-wide and zonal energy pricing, fuel input forecasts, policy changes, and how these impact energy prices and generator spark spreads looking forward in PJM, NYISO and ISO-NE. Visit our Energy page to learn about our energy coverage.
ESAI Power’s Renewable Energy coverage includes solar, wind, hydroelectric, & storage. We outline regulatory and market factors that impact the supply and demand balance for Class I RECs and project the supply & demand balance forecast for the next decade. Visit our Renewable Energy page and our Renewables Watch publication page.
ESAI Power analyzes Transmission proceedings before FERC & State PUCs with a specific focus on FERC Order 1000, competitive transmission development, public policy on transmission, and expansion required to meet renewable and clean energy goals. Visit our Transmission coverage page and our Transmission Watch publication page to learn more about our coverage of emissions.
To monitor Emissions, ESAI Power closely follows existing regulations at the federal, regional & state levels and analyzes the potential impacts on emissions markets. Our analysis includes price projections for SO2 and NOx (annual and seasonal) allowances. Visit our Emissions page and our Emissions Watch publication page to learn about our coverage of Emissions.
Our Generation Asset Monitor evaluates the outlook for the construction of generation projects and plant retirements in ISO-NE, NYISO, PJM & MISO. Each project is assigned a “probability of completion factor in % terms” that is then applied to develop a forward assessment of likely capacity additions and retirements in each pool. The database is published quarterly and available in a basic format that provides a summary overview or fully detailed format to include project-by-project level details such as project status, queue numbers, project name, developer permit status, financing status, PPA status, etc.
Order Your Free Trial Research Reports
Please fill in your contact details, check the boxes on the right to indicate your preferred complimentary research report, up to a maximum of 3 reports and if you have any comments.
If you have any questions about our free trial process, please contact Tom Bausemer on (781) 460-1227 or [email protected] to order your free trial report.
*Generation Asset Monitor (GAM) database with detailed evaluation of generator projects under development and at-risk of retirement is not included in our free trial for Capacity Watch or our Benchmark Energy Research evaluation. ESAI Power grants free trials at its sole discretion. Note: the GAM can be viewed on a demo basis over teams meeting, however our corporate policy is not to grant access to our most recent research reports during a free trial.
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