Without accurate short-term forecasts, energy companies are exposed to uncertain decisions in trading and forward-looking analysis which can leave money on the table or risk significant losses to the bottom line.
The ABB Short-Term Market Forecasts improve an energy company’s bidding, trading and risk management with a highly-accurate, hourly LMP forecast generated through a fundamental analysis of market conditions. The forecasts are generated through a fundamental analysis of market conditions, including nuclear and transmission outages, fuel prices and demand. This forecast provides hourly LMPs over a 40-day horizon, along with the associated binding constraints and marginal resources. ABB market experts have vetted the forecasts and benchmarked them against closing prices, further ensuring their accuracy and solidifying your decisions.
Accurately forecasting locational marginal prices and other market-related data points significantly impacts bidding strategies, trading decisions and risk management for any company buying or selling electricity. Even the slightest change in a forecast can impact how generation bids are determined, how to hedge against market positions, or how to price out a trade. A highly-accurate forecast, which is further out than the day-ahead pricing provided by ISO markets, is necessary to make these critical, short-term business decisions.
ABB handles the data gathering, model development and validation required for accurate forecasts, providing a cost effective solution for short-term market forecasting. And only ABB has the expertise to back up our forecast.
- Fundamental analysis to generate the forecast, incorporating generation and transmission outages, full topology of the transmission grid, fuel price forecasts and demand forecasts
- Integrated view of historical and forecasted LMPs for a complete understanding of the market
- Market experts, including advisors and analysts, to vet and back up the accuracy of the forecasts
- Benchmarked against historical prices to validate methodology
- Backed by a company with the market expertise, data services and financial backing to adapt the solution as market and client requirements change
Short-Term Forecasts Options
Reference Case Short-Term Forecasts
Natural gas prices can be extremely volatile and are the biggest driver of electricity price. In order to capture the impacts of the volatile gas prices, ABB provides monthly short-term updates to our semiannual Reference Case forecast using the latest NYMEX natural gas forward prices. The Short-Term forecast offers our clients a tool to guide trading and risk management activities.
The Reference Case Short-Term Forecast looks forward over the next 24 months, offering monthly gas and power prices, market heat rates, spark spreads, and hourly prices for the entire 24 month period. Like the Reference Case, this product is delivered via our Salesforce Advisors Online portal. We offer it in Excel format congruent to the Reference Case Data Supplements which include forecasts for 72 market areas across North America. T
he Reference Case Short-Term forecast is also available in the EV Power Module of our Velocity Suite product. Power prices are produced with the PROMOD modeling tool and use the same rigorous approach used in our semiannual 25 year Reference Case product releases.
PJM ARR Forecast and Bidding Strategies
ABB Advisors provides analysis of Annual Revenue Rights (“ARR”) paths for regional markets (e.g. PJM). Modeling simulations are full hourly (8760) with hourly level reporting detail available for any items requested by Customer, including bus-level marginal cost components for congestion and losses, unit operations, and binding transmission constraints. Load hubs will be constructed as needed to represent path delivery sinks. ABB establishes a “Base Case” for the analysis based on the latest available data for the market year.
Reports will cover items required to calculate hourly congestion exposure and increase granularity for Customer load zone(s) that represent path delivery points. Based on the results and analysis, ABB works with Customers to develop an auction strategy for nominating ARRs allocations. This consists of a recommended set of pathways with specified MW levels, including documentation for the quantitative analysis.