ESAI Power’s forecasts are based on fundamentals. We keep a close eye on forward curves and transactional activity. We are always prepared to explain why our fundamental view may be different from forward curve quotes or specific transactional activity in the energy, capacity and RGGI markets. ESAI Power’s long-term market forecasts are differentiated versus other forecasting services on the power markets as a result of our four key strengths.
When forecasting the supply curve, particularly the granular details on generation projects in the queue, upcoming retirements, and projects at-risk of retirement really matter. Our deep understanding of PJM, NYISO, & ISO-NE and our clear and transparent presentation of our forecasts, underlying assumptions, and market dynamics helps companies clearly understand the range of likely scenarios to inform their investment or trading decisions. ESAI Power provides annual and monthly granularity (on- and off-peak, 7×24) in our reports and published outlooks. We can provide hourly granularity if needed but there could be limitations to the usefulness of hourly data from our models depending on the application which we would be happy to discuss.
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 models.
- Heat Rate, Output Specs & Transmission Grid Constraints Our models include all details that impact prices on the grid. For example, every generator 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, we project 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 Interconnection Queue, Power Plant Retirement Outlooks and Load Forecasts
One aspect of our research that is unique is our Generation Asset Monitor (GAM). We provide clients with a monthly excel database with an outlook for the probability of completion for all generation projects in development and under construction in the PJM, NYISO, and ISO-NE interconnection queues. We also forecast power plant retirements, and plants that we deem at risk of retirement. The bottom line is that our fundamental outlooks are based on a very high level of detail with attention to accuracy. On the demand side, ESAI Power incorporates each of the RTO load forecasts into our Energy Models as part of our forecasts.
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. We ensure the assumptions behind our outlooks are always clear, available, and well-presented in our research reports. This allows clients to agree/disagree with the assumptions and weigh the impacts on the pricing. We help clients with sensitivities if needed.
For example, we may assume that no offshore wind will get built in NYISO and PJM, whereas the client’s internal outlook may deem that more OSW will get built in the long run. 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.
PJM, NYISO, ISO-NE Expertise
Our team has a deep knowledge of the New England, New York, and PJM power markets, having focused on these RTOs for over 20 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 more than 20 years ago.
Our market updates and reports provide detailed overviews of current market dynamics, rule changes, market parameters and upcoming regulatory changes that could have a significant impact on Capacity, Power, Gas, RGGI and RECs prices. This is backed up by direct ‘analyst access’ where clients receive additional color on our market outlooks.
Our Research Methodology
Energy Asset investment, financing and power trading decisions should always be based upon fundamentally sound inputs and detailed outlooks on the Interconnection queue and potential power plant retirements. 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 understanding of construction of generation projects, the likelihood of project completion, and energy asset retirements and those power plants at-risk of retirement due to economics or emissions rules. Supply forecasts also require a broad understanding of how transmission, emissions, and renewable energy mandates impact capacity and energy price outcomes.
Our Long-Term Forecasts Publications
Capacity Watch delivers expert analysis of capacity markets and the policy drivers shaping capacity prices in upcoming auctions, and long-term trends over a 10-year forecast horizon in PJM, NYISO, ISO-NE and MISO. Our Capacity Watch includes detailed market updates and insights into how new market rule changes, changes in new generation projects and plant retirements affect reserve margins and forward market values.
Coverage includes:
- In-depth analysis of the Interconnection Queues and Power Plant Retirements.
- Construction outlooks for generation projects across PJM, NYISO, ISO-NE, and MISO.
- Pre- and post-auction briefings for PJM’s BRAs, NYISO Summer Strip and Winter Strip auctions, ISO-NE Capacity Auctions, and MISO’s PRAs, along with continuous, in-depth capacity market coverage in all 4 RTOs.
Energy Watch delivers these key deliverables for subscribers.
- Gas price forecasts and market commentary.
- Basis forecasts for most Northeast delivered gas pricing points, including Tetco M3, Transco Zone 6 New York, and Algonquin City Gate.
- Zonal On Peak Power Price forecast for 10-years for PJM, NYISO and ISO-NE.
- Zonal On Peak Spark Spread forecast for 10-years for PJM, NYISO and ISO-NE.
- Track pipeline and gas infrastructure projects and analyze changes in pipeline system constraints that can impact regional basis spreads.
- Detailed Forecast Assumptions including RGGI updates, supply and demand assumptions.
Renewables Watch delivers expert analysis and forward-looking insights into the PJM, NYISO and ISO-NE renewable energy markets. ESAI provides Tier I REC supply and demand outlooks for the ISO-NE, PJM (tri-state), Virginia, and New York markets, and the associated REC price forecasts. Updates on significant policies (state and federal) facing the Northeast renewable energy markets are also provided.
Renewables Watch covers the latest regulatory changes, updates to supply and demand, market trends, and pricing dynamics shaping solar, wind, hydroelectric, and storage across the PJM, NYISO and ISO-NE regions. 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.
ESAI Power continuously monitors and analyzes transmission projects and ongoing proceedings before the Federal Energy Regulatory Commission (FERC) and State public utility commissions (PUC), with a specific focus on FERC Order 1000 implementation, competitive transmission development, public policy transmission needs, and the transmission expansion required to facilitate state’s renewable and clean energy goals. We assess regulatory and policy risks for transmission developments and advise clients on investment climate and opportunities.
ESAI publishes a quarterly database of Transmission Project updates in PJM, NYISO and ISO-NE and published market briefings in response to important shifts in the Transmission markets. Visit our Transmission page to learn about our Transmission Watch publication.
Emissions Watch provides regular updates and analysis on major federal, state and regional environmental regulations (e.g., CSAPR, RGGI, state CO2 standards). ESAI regularly evaluates potential implications of these regulations on the future generation mix. We provide an outlook on allowance prices of tradeable allowances, including RGGI and CSAPR. Issuance of updates is driven by industry and regulatory developments. Visit our Emissions page to learn about our Emissions Watch publication.
Order Your Free Trial Research Reports
Please fill in your contact details, check the box(es) 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) monthly database with detailed evaluation of the Interconnection Queue projects under development and at-risk of retirement not included in free trial for Capacity Watch. ESAI Power grants free trials at its sole discretion. Note: the GAM product can be demonstrated to prospective clients on a demo basis over zoom or teams meetings. Corporate policy is not to grant access to our most recent reports during a free trial.
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