Modeling Energy & Ancillary Service Markets Forecasting Prices and Valuing Assets Los Altos, California  

This workshop may be offered to individual companies at their convenience and will be customized to the specific needs of each organization.

Presented By   LCG Consulting Los Altos, California 94022 Tel: (650) 962-9670 Fax: (650) 962-9615 www.energyonline.com

Objective

In this seminar we will explore the competitive market structure for pricing electricity products and discuss how to model all the components of the energy, capacity and ancillary markets; how to manage risks associated with market participation; and how to evaluate energy options and derivatives.

Modeling the Power Market

The seminar will cover issues involved in modeling electricity markets and case studies with hands-on applications. The fundamentals of the multi-market simulation, the relationship between the prices of energy and ancillary services, and strategic bidding will be given significant attention. We will discuss how to determine the relevant prices in the various markets throughout the US; how to systematically evaluate the volatility and uncertainty associated with factors that impact electricity prices; and how to use volatility measures for evaluating risk management strategies and asset valuations.

Experienced professionals will lead the participants through a variety of cases and provide hands-on sessions to model different markets, forecast energy and ancillary service prices, and evaluate assets. In particular, forecasting of bid-based day-ahead forward prices of energy, ancillary services (regulation, spinning, non-spinning and replacement reserve) and the capacity price will be covered in detail. In many regions, such as in California, New York, and NEPOOL, there are bid-based energy and ancillary services markets and these will be used as our major examples. In the absence of ancillary service markets, the price of firm energy implicitly includes the ancillary service prices. Any structural analysis of this type of market requires estimation of the volatility of the market and its impact on reliability and prices.

We will discuss the structure of various electricity markets and show how to quantify the influence of market structure on energy prices. Estimation of the forward prices (day-ahead and hour-ahead for energy and ancillary services), forward (futures) contracts (one-month ahead to 18-month ahead), hub transaction index prices and spot or real-time prices for market balancing and settlements will be covered in the hands-on case studies.

The seminar will cover all the aspects of the electricity markets in the US. In particular, the application of the analysis of prices in the following markets will be included in the case studies.

We will use our UPLAN Network Power Model (NPM), a competitive market bidding model and optimal power flow analysis program, to simulate our case studies and determine the impacts of the various issues in a regional power market. NPM has been specifically developed to analyze forward prices for energy and ancillary services and real-time prices for spot markets, and to measure the relationship between them. The model treats uncertainty directly in terms of volatility analysis to replicate the nature of possible market outcomes in the future. It also determines the optimal market strategies and valuation of assets under uncertainty.

LCG Consulting and the Presenters

LCG Consulting, actively involved in utility restructuring and competition in the U.S. and abroad, is an industry leader in providing specialized software and consulting services in the areas of integrated resource planning, financial analysis and utility power grid operations. LCG has developed UPLAN Network Power Model and UPLAN Volatility Model specifically to study utility restructuring, forecast market prices under competition, evaluate portfolio contracts and perform risk management. Your speakers and case study leaders are as follows.

Your speakers and case study leaders are as follows:

Dr. Rajat Deb, President of LCG and chief architect of the UPLAN program, is a widely recognized authority on restructuring and large-scale system modeling. Dr. Deb has made significant contributions in the deregulation of the electricity and gas markets in the United Kingdom and California and in many other parts of the United States. Dr. Deb has held faculty positions at SUNY, Stanford and Santa Clara University.

Mr. Richard Albert, VP of Consulting of LCG, is a recognized industry expert in resource planning and evaluation, and has extensive experience in working with utility restructuring issues and competitive market structures. Mr. Albert has conducted more than 50 market planning studies for the utilities and public agencies.

Dr. Carol Cheng, Senior Power System Engineer, is responsible for transmission system modeling at LCG. Before joining LCG, Dr. Cheng worked as Sr. System Engineer at Pacific Gas and Electric Company for 5 years. She holds a PhD in Electrical Power Systems from Georgia Institute of Technology. Dr. Cheng has developed a number of models in the area of transmission analysis and pricing for PG&E. She has extensive knowledge of the transmission system of WSCC and the pricing practices in California.

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