Fully integrated power market forecasts including electricity price forecasts to inform and aid in making smarter investment decisions
Introduction to Long-Term Electricity Price Forecasts
Our long-term power forecast is a projection of power prices 20 years into the future. This forward view of power markets helps market stakeholders evaluate investment risks and opportunities. This product will provide powerful insights to determine the economic feasibility of new projects, optimize hedging strategy, understand impact of broad market changes and policy, and perform valuation for potential investments or divestitures.
Enverus historical and forecast of select locational marginal pricing (LMP) nodes in ERCOT from 2024 to 2045 – Monthly Averages.
Project developers, utilities, independent power producers and investors need to understand the value their resources will provide 5, 10 and 20 years into the future and from which value streams they can realize future revenue.
The grid is becoming increasingly volatile, necessitating price forecasts to help make informed decisions, considering future inflection points in the energy, capacity, renewable energy credits (REC) and ancillary markets.
Long-Term Market Forecasts can be used for:
- Investment decisions
- Hedging strategy
- Project feasibility analyses
- Power purchase agreements
- Risk management
- Regulatory and policy compliance
- Market strategy and competitiveness
- Valuation and asset performance
- Sustainability reporting
How Are Long-Term Price Forecasts Calculated?
Depending on the source of a long-term market forecast, there is a variety of factors that may go into a model that determines power prices of the future. Utilities, developers or investors may have analysts in-house to crunch the data and create models given ongoing market drivers, but many prefer to use a reliable external source that provides that data for an in-house analyst to bolster their proprietary data.
Key elements influencing long-term power market forecasts may include:
Economic Growth
Electrification Trends
New Development
Retirements
Transmission Expansion
Tax Incentives
Market Design
Fuel Prices
Large Load Development
Environmental Policy
Emerging Technology
Reliability Criteria
Importance of Model Transparency
Energy market stakeholders use external sources for long-term electricity price forecasts. Transparent models enable stakeholders to validate results, identify potential biases and make informed decisions. Many models in use today use manual forecasting processes that are costly and time-intensive to build. It’s important to ask:
- Can you explain the model? And can I access documentation on how it works?
- How often is the model updated to reflect market drivers?
- Does the model allow for scenario or sensitivity testing?
The power grid changes constantly. Using outdated price forecasts or omitting significant price drivers can skew projections.
Mitigating Risk With Advanced Forecasting Tools
The Enverus Long-Term Power Market Forecast offers significant value by providing a comprehensive, data-driven view of future energy markets. This product enables stakeholders to view detailed future outcomes, assess investment risks and identify market inflection points with confidence. Leveraging unmatched industry expertise and advanced modeling techniques, it delivers granular forecasts for energy, capacity, ancillary services and RECs.
Methodology and Inputs
The Enverus Long-Term Power Market Forecast uses a combination of publicly available and proprietary data sources coupled with Enverus analytics. External datasets incorporated include ISO reports, utility IRPs, EIA datasets and EPA CEMS data. We factor in all key market drivers including economic growth, data centers, electrification, residential solar, current fuel market forwards, expected large transmission investment, federal and state policy, expected new resources based on proprietary queue probabilities, anticipated future builds considering economics, reliability requirements and environmental policy.
The zonal forecast is developed using a fundamentals-based production cost model dispatched hourly, while the nodal forecast is created through a sophisticated machine learning model which considers everything from demand to available transmission capacity to renewable generation. In addition, we are creating fully integrated pricing for ancillary services, RECs, real-time energy and capacity. We are also developing optimized dispatch for all major operating assets allowing the user to determine the true value of any asset when utilizing a proper bidding strategy. A key differentiator of our models is that we give full transparency of driving, assumptions alongside the ability to access hourly level pricing. This includes nodal pricing for all settlement points across the United States.
Integrating Enverus PRISM® and other workflows enhances decision-making processes, optimizing investment and planning strategies. By eliminating the need for costly, time-intensive custom modeling, Enverus’ solution accelerates economic analysis and market evaluation, making it an invaluable resource for investors, developers, utilities and grid operators.
