Building efficient and effective markets, or advising companies how best to operate within new market structures, requires expert energy economists, power system engineers and information systems professionals.
PA’s electricity market structuring experts assist clients around the world in designing and implementing markets that best deliver benefits, including more efficient investment, more efficient and productive use of assets, better allocation of resources, innovation, and demand-side response.
Client benefit
PA's energy market structuring team has a strong combination of electricity market and economic expertise, project management skills and discipline, and management consulting skills. The PA team provides economic thinking, tempered by experience with power systems and power plant operation, and in implementing actual working markets. In this uncertain climate PA knows what works and what does not – and the reasons why.
PA’s clients have been able to implement markets that out-perform the competition, on time and within budget, as a result of our deep knowledge and experience.
Designing/implementing electricity markets
Designing and implementing markets for electricity is an exercise in fitting a market design into constraints while maximizing the potential for market benefits. PA’s experience in successfully accomplishing this difficult balance is unmatched in the industry and is supported by an excellent track record of involvement in successful electricity market implementation projects.
PA’s market design experience ranges from initial planning to consultation, market trials, market start, and making later refinements in operating markets. Our team has been engaged in the overall development, implementation and refinement of electricity markets in several countries.
Our work includes consultation with and education of participants and other stakeholder about market restructuring, in conjunction with electricity industry reform and market development and implementation. In addition, PA has been engaged in the development, implementation and refinement of:
- modern electricity markets, including those with a gross pool and locational marginal price approach and those with a net pool approach
- detailed electricity market rules and software formulations of those rules
- financial transmission rights (FTRs) and equivalent instruments to hedge basis risk in locational marginal pricing electricity markets
- forward markets and hedging markets to redistribute risk restructured cash markets.
Electricity market IT design/implementation
PA’s core capabilities lie in its ability to deliver successful information technology systems that integrate detailed energy market knowledge with expert systems development capabilities. PA offers the advantage of a team that works with the client to develop (build, purchase or combination) a fully integrated solution. We do this by utilizing internationally recognized market design advisors and IT developers who have developed electricity market software for major markets.
Our experience includes:
- creation of data warehouses to centralize data from diverse sources for analysis and reporting purposes
- development of Web-based reports (of varying levels of sophistication), and Web portals for use in communicating information to staff, trading partners and the public
- designs and development of complete IT systems for the operation of an electricity market, including the databases, settlement systems, risk and trading systems and market clearing optimization engines for both the market operator and market participants.
PA utilizes a proven IT project methodology that delivers results on time and within budget.
Participant design/operating services
PA’s competence and experience in electricity market design and implementation provides a unique capability to assist electricity market participants in understanding and adapting to new markets.
Engagement with clients occurs within various areas including:
- development of market offer/bid strategies
- alignment of participant activities and assets to be more consistent with the working of electricity markets
- development of risk management and hedging approaches, both for temporal variations and locational differences in spot prices
- development of participant IT systems and associated software to enable more effective market participation and to support complex bidding and hedging strategies
- advice on valuation and related matters for new market entry and asset acquisitions in newly established markets
- advice on the impact and implications of market design and redesign options.
Market simulation and modeling
Market simulation provides policy-makers and market participants an understanding of the implications of various market design choices. In leveraging PA’s extensive experience with market simulation models around the world, clients gain a thorough understanding of market behavior applicable to their organization and business.
PA utilizes both off-the-shelf market simulation models and proprietary leading-edge electricity market simulation models developed in-house. These models provide the flexibility to perform both standard market simulation using bid-based modeling and market gaming based on the economic theory of Cournot games. These simulations include both standard transmission-based market-bidding models and economic gaming models. Our modeling capabilities allow the simulation of locational marginal prices, the assessment of potential market power abuse, and the estimation of spot market prices under a range of scenarios.
