Markets / Power

Renewables

 

Your Challenges

Accurately valuing renewable assets such as hydro, pump storage, solar, wind and battery storage

Determining optimal hedge strategy insights for renewable assets over short to long term timeframes

Capturing and modelling volumetric, price and operational risks for renewable generation assets and contracts

Incorporating renewable generation models into existing risk management frameworks

Modelling the impact of renewable generation on market prices

Analysing hedging generation output to both minimise risk and capture maximum upside

We Understand Your Market

The hedging of renewable assets is becoming increasingly challenging in wholesale power markets as developers’ financing becomes more creative. There is an increasing movement away from long term power purchase agreements (PPAs) toward a preference for structured deals that capture spot price volatility, while offering a minimum level of return through floor contracts, from the hedging counterparty.

In addition, a specialised approach for energy trading and risk management is needed for renewable portfolios driven by weather risks as well as risks from curtailment, operations, counterparty risk, and policy changes.

Be confident that you are working with specialists that understand your renewable power market challenges. With many years of experience, we see your renewable energy risk management and renewal energy valuation concerns from a practical, real-world perspective.

Our Solution

Lacima offers two solutions for renewables market participants: Lacima Trader and Lacima Analytics – providing a complete solution from structuring and trading to risk management of renewable energy portfolios.

Lacima’s solutions use the same consistent renewable power-specific models and methodologies to capture the unique market characteristics and accurately represent the volumetric risk posed by renewable assets as well as capturing physical plant constraints . In addition, stress testing and scenario analysis tools provide further insight and analysis capabilities.

Whether you are in Trading, Structuring & Origination or in Risk Management , use Lacima’s solutions to accurately value renewables contracts and physical assets, and support key decision making by leveraging Lacima’s risk solutions to gain deep insights into the drivers of risk and how they change through time. Lacima calculates the full range of market and credit risk metrics including Earnings-at-Risk and Revenue-at-Risk, as well as more standard risk management metrics such as Value-at-Risk and Potential Future Exposure, for superior trading and risk management results.

The Lacima modelling framework allows users to value, hedge and analyse one or more hydro, wind, solar or battery generator types in a single asset portfolio or in a wider portfolio consisting of thermal assets, financial derivatives, virtual power plants or power purchase agreements.

Energy Traders, Structurers, and Risk Managers can enjoy a range of benefits including:

  • Value and hedge renewables generation assets to optimise trading outcomes
  • Flexibly model renewables assets using a range of different statistical models. Capture characteristics such as sub-hourly prices and generation, daily averaging, shaping and seasonality of generation (including for wind and solar).
  • Analyse and drill down to the effectiveness of hedges for a renewable asset or a portfolio of assets
  • Obtain decision support for valuation of generation assets, VPPs and power purchase agreements
  • Perform Scenario Analysis for a wide range of user defined parameters, forward curves, portfolio mixes, or volatilities and other model parameters
  • Calculate full distributions for key output variables such as revenues, costs, profits and volumes
  • Integrate price and deal capture using your existing energy trading and risk management (ETRM) system(s)
  • Accurately value renewable specific contract types:
    • Power Purchase Agreement (PPA)
    • Volume triggered Cap
    • Volume triggered Floor
    • Volume triggered Swap
    • Load following contracts
    • Caps and Floor options
    • Structured Contract (the user can input their desired payoff formula)