The electricity industry is currently faced with the challenge of analyzing and justifying their resource portfolio expansion plans in recognition of the economic impacts of current and potential future regulatory policy, as well as difficult questions about how rapidly new technologies will drop in price and be adopted by market participants. Such environmental considerations include renewable resource requirements, conservation initiatives, and carbon dioxide (CO2) emission constraints. Technology questions include how rapidly renewables will drop in cost, how much they will cost to integrate, how strongly they will be incentivized by state mandates, and how they will also be adopted at low voltage scale.
The Brattle Group provides economic analysis to develop integrated resource plans for utilities that consider generation options with varying degrees of exposure to market and regulatory risks, the optimal portfolio of contracts (power purchases), demand-side options, and transmission alternatives. Our experts are also on the forefront of renewable integration planning and the wide range of new and complex issues related to these resources.
We develop resource planning approaches and techniques that focus on uncertainty and risk as essential components of sound investment decisions and transparent communication with stakeholders. Our experts in the electricity industry have comprehensive skills in financial modeling, market analysis and forecasting; option pricing; decision analysis; and risk management. These capabilities are essential to providing clients with unrivaled support for regulatory proceedings in rapidly evolving energy markets.
Generation planning for utilities has become very complex and risky due to high natural gas prices and likely future limits or costs on CO2 emissions. Some of the scenarios that must be considered would radically alter system operations relative to current patterns of use. Brattle experts have assisted utilities with long range planning for how to measure and cope with these risks, including how to build and value contingency plans in their resource selection criteria, and what kinds of regulatory communications to pursue to manage expectations in this difficult environment.
For a utility in the West, Brattle experts assessed the potential compensating resource needs and costs associated with integrating intermittent resources into the regional system. We designed and managed the development of the first user-interactive evaluation tool to estimate the investment and operational cost associated with increasing regulation, load-following, day-ahead scheduling, and ramping services that will be needed with increasing intermittent resources that have generation output that can be unpredictable and variable in nature. The framework and mechanics of the model have been presented before the California Public Utility Commission’s Stakeholder workshops, with results of scenarios discussed at various forums.
For several years, members of The Brattle Group have led the analysis of five successive Integrated Resource Plans for the two major utilities in Connecticut and the CT Department of Energy and Environmental Protection (DEEP). These projects relied on an integrated modeling system that simulated the New England locational energy market (with DAYZER), the Forward Capacity Market, REC markets, and competitive suppliers’ likely investment/retirement decisions. The studies addressed electricity supply risks, natural gas supply into New England, RPS standards, environmental regulations, transmission planning, emerging technologies, and energy security. Brattle experts provided oral testimony before the DEEP and solicited input from stakeholders.
Complex business and legal matters require intellectually honest and analytically rigorous solutions that are thoughtfully developed and clearly communicated. We apply economic and finance principles with uncompromising quality to achieve clarity in the face of complexity. Independent analysis, responsive execution, and compelling presentation. That’s Brattle. That’s the Power of Economics.