Contracts Company modelling framework
Since 2015, LCP have developed and maintained the modelling framework used by the Low Carbon Contracts Company (LCCC). The LCCC are responsible for administering the Contracts for Difference (CFD) regime, a form of low-carbon support that guarantees a set price for a generator’s electricity.
The ‘Supplier Obligation Forecasting Model’ built by LCP is used to determine the levy rate charged to suppliers to fund CFD support payments and ensure enough reserve is held by the LCCC at any given time to cover a 1-in-20 worst case outcome.
Robust forecasting of demand, renewable generation and power prices are a key component of the model. SOFM incorporates stochastic modelling to simulate a wide range of intermittent generation and demand profiles and provide a probabilistic distribution of possible market out-turns. The model takes in live data inputs such as market price forwards in order to provide up-to-date projections of power prices in the near-term.
We also provide the LCCC with an online platform known as the “Transparency Tool”, which is used to communicate the results and underlying calculations to the various stakeholders in the CFD regime.
SOFM is now used by the LCCC to calculate the interim levy rate and total reserve amount on a quarterly basis. We continue to work closely with the LCCC forecasting team to support this analysis.
How we can help
We can help our clients with a wide range of issues from whole system modelling to individual power plant and policy impact analysis.
Strategic advice aimed at maximising the benefits and minimising the risks associated with the Capacity Market and Contracts for Difference.
We advise on the optimal dispatch of assets within the wholesale market, forward planning of maintenance activities and valuation of commercial upgrades to plant.
We provide detailed forecasts of the GB and Irish power markets, using our EnVision modelling framework. This can provide both short-term and long-term forecasts of all key system metrics, from system wide to individual assets.
We work extensively in the Irish market, providing market modelling and analysis to investors, generation owners and governments.
Our understanding of market dynamics and modelling experience allow us to offer evidence-based recommendations on complex policy and regulatory issues that allow fully informed decision-making.
We combine bottom-up unit-level modelling with market and policy insights to quantify the value and understand the risk associated with any generation asset.