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 capacity markets for example. 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 Generation Project Outlooks
One aspect of our research that is unique is our Project Evaluation Program (PEP). We provide outlooks in an excel database for the probability of completion for all generation projects in development and under construction in PJM, NYISO, and ISO-NE, including all renewable projects. Retirement outlooks are also included. The bottom line is that our 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. 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 a lot of offshore wind will get built in NYISO, whereas the client’s internal outlook may deem that very little 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.
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 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 20 years ago.
Our quarterly reports provide detailed overviews of current market dynamics and upcoming changes that could change pricing outlooks. This is backed up by direct ‘analyst access’ where clients receive additional color on market outlooks similar to what was presented in ESAI Power’s recent Goldman Sachs Capacity Markets Webinar.
Our Research 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 understanding of construction of generation projects, the likelihood of project completion, and energy asset retirements and those at-risk of retirement. Supply forecasts also require a broad understanding of how transmission, congestion, emissions, and renewable energy mandates impact capacity and energy price outcomes.
Our Long-Term Forecasts Publications
ESAI Power’s coverage of capacity markets is lead by our flagship Capacity WatchTM report. This publication is counted on by wholesale power market participants as the forward curve to inform your investment and business decisions. Visit our Capacity page to learn more about our Capacity WatchTM publication.
ESAI Power’s Energy WatchTM 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. Visit our Energy page to learn about our Energy WatchTM publication.
ESAI Power’s Renewables WatchTM 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 to learn about our Renewables WatchTM publication.
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 page to learn about our Transmission Watch publication.
To monitor Emissions, ESAI Power closely follows existing regulations at the federal, regional & state level and analyze the potential impacts on emissions markets. Our analysis includes price projections for SO2 and NOx (annual and seasonal) allowances. 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.
*Project Evaluation Program (PEP) database with detailed evaluation of generator 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 PEP product can be viewed on a demo basis over zoom or teams. Corporate policy is not to grant access to our most recent reports during a free trial.
ESAI Power LLC
401 Edgewater Place, Suite 640
Wakefield, MA 01880
ESAI Power is a market research and consulting firm that delivers focused analysis of the wholesale power markets in the Northeast region of the US: PJM, NYISO, and ISO-NE. Since 2001, ESAI has been providing market-focused research product content and custom consulting services for Northeast power market participants including investors (banks, private equity, & hedge funds) & developers, generation owners & operators, utilities & retail electricity suppliers, regulators & RTOs, traders, and end-users & buyers.
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- ISO-NE Forward Capacity Auction Forecast Track Record November 27, 2023
- PJM Capacity Auction Track Record 2016 – 2023 November 21, 2023
- ISO-NE Energy Watch Update | October 2023 | Energy Watch Blog October 11, 2023
- NYISO Capacity Prices Volatile Heading into Winter 2023-24 | Capacity Watch Blog October 9, 2023
- RGGI Auction 61 – Clearing Prices Up Nearly 9% | Emissions Watch Blog September 8, 2023
- Will Virginia leave RGGI? | Emissions News August 31, 2023
- PJM Interconnection Process Update | Generation Asset Monitor Blog July 24, 2023
- NYISO Capacity Price Forecast | Capacity Watch Blog July 3, 2023
- RGGI Auction 60 – Clearing Price of $12.73/ton | Emissions Watch Blog June 9, 2023
- MISO PRA Scheduled to start April 18th | Capacity Watch Blog March 28, 2023
- Platts Global Power Markets™ Conference April 17-19 March 28, 2023
- Power and Energy Markets Analyst March 17, 2023
- Senior Research Manager March 16, 2023
- RGGI Auction 59 – Clearing Price of $12.50/ton | Emissions Watch Blog March 10, 2023
- ISO-NE FCA17 Auction Dynamics and Capacity Price Forecast | Capacity Watch Blog February 24, 2023