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New: Benchmark Power Curve service launched

Ben Hall Ben Hall Head of New Business
10th May 2019

Cornwall Insight has recently launched its new Benchmark Power Curve (CI BPC) service to complement its already deep set of wholesale research subscription services.

The CI BPC is a comprehensive market and asset-level power price modelling service that delivers long-term price forecasts, informed by industry-leading regulatory, market and policy expertise, and supplemented with direct access to trusted practitioners.

Focusing on scenario-based 20-year projections of electricity prices in Great Britain (GB), coverage includes baseload and peak prices presented in real values of the day and at quarterly granularity.

With the rapid and ever-changing landscape of the market, the scenarios are not mere snap-shots based on the current market structure, but capture this developing nature with greater renewables, flexibility, interconnection with European markets and growth of electric vehicles (EVs).

The CI BPC is designed with a range of market participants in mind from lenders, equity investors, developers, operators, traders and financial advisors engaged with the power market in GB. It has also been developed with a technology agnostic approach, with price curves for different technologies (including offshore and onshore wind, solar PV, CCGT and others), fully reflecting price and value-capture based on the different operating and load profiles of various types of power assets.

The report will also show the effect of location on the behaviour of small-scale capacity in the distribution networks. With the modelling integrating balancing market, capacity market, gas, coal, and carbon forecasts.

The service is presented quarterly with a summary report, accompanying a detailed results workbook. Subscribers will also be able to take part in a user group forum discussing the issues and helping to frame future updates.

One notable output from the first set of results concerns the ability and process for GB to meet its current carbon budgets. Findings from the analysis show that meeting the fourth and fifth carbon budgets is possible without the commissioning of new nuclear capacity and that this can be achieved at a lower cost compared to developing a new fleet of reactor as improvements to the development and operation of onshore and offshore wind and solar becomes increasingly cost effective. This would mark a notable shift from previous thoughts that nuclear generation and new build plants were an imperative step towards meeting our carbon targets.

However, despite the falling costs of onshore and offshore wind, deployment would still need some form of support above and beyond the current market as captured wholesale prices for renewables projects, as the cannibalisation effect will reduce revenues. Capacity Market de-rating is also seen to be too low to encourage new build.

This continued operation of traditional, thermal baseload plant is increasingly called into question; with the modelling showing in some scenarios minimal additional CCGT deployment, with new build generally only replacing older units, as highlighted at Figure 1 below. 

Source: Cornwall Insight

The wider implications in terms of security of supply would see a shift, to now being provided by interconnectors, reciprocating engines and OCGTs – but in order to drive this new capacity an increase in the CM price is seen as inevitable.

While in terms of battery storage, such assets can be seen to play an important role, but this is predominantly restricted to supplying wholesale arbitrage, with widescale deployment not viable until late 2020s.

For more information about Cornwall Insight’s Benchmark Power Curve and our other wholesale subscription services, please contact Ben Hall (b.hall@cornwall-insight.com).