Markets / Power

Utilities

 

Your Challenges

Accurately forecasting long term cashflows and earnings distributions for a complex portfolio of physical generators and financial assets

Understanding risks and sensitivities of new trades and hedges, changes in the forward curve or the impact of a repeat historical event on your portfolio

Analysing a portfolio to determine the optimal hedges for a physical generation portfolio comprising both thermal and renewable assets such as coal, CCGT, CHP, wind, solar and battery storage

Accurately modelling risk factors such as power spot prices, fuel costs, gas usage, hydrological flows, wind speeds and power production

Tracking trader, counterparty or market limits to manage and automatically report breaches

Accurately valuing complex power trades that back-to-back your physical assets such as tolling agreements and PPA’s

We Understand Your Market

Volumetric risks caused by a multitude of factors including forced outages, lack of sun, wind or rain or supply restrictions, as well as liquidity risks from availability of hedging instruments in the forward markets, risks from volatile and sometimes unpredictable spot prices, operational, market, regulatory and even political risks underpin the need for a specialised approach to energy trading and risk management for power utilities.

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

Our Solution

Lacima offers two solutions for players in the utility market: Lacima Trader and Lacima Analytics – providing a complete solution from trading to risk management using the same consistent power, gas, and renewable market specific models and methodologies to capture the unique characteristics of each market. 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 power and gas contracts, model physical generation 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 gross margin-at-risk, as well as more standard risk management metrics such as Value-at-Risk (VaR) and Potential Future Exposure (PFE), for superior trading and risk management results.

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

  • Value and hedge your whole portfolio of power assets (including thermal, wind and hydro generation assets with wide ranging plant characteristics and constraints) and financial trading contracts to capture full portfolio value while minimising risk
  • Flexibly model renewables assets using a range of different statistical models. Capture characteristics such as sub-hourly prices, negative prices, daily averaging, shaping and seasonality of generation (including for wind and solar).
  • Analyse and drill down to the effectiveness of hedges for a portfolio of generation assets including coal, CCGT, nuclear, wind, hydro, solar etc.
  • Optimise your whole portfolio by modelling physical constraints on generators like ramp rates, min up & down times, heat rates curves, fixed and variable costs, as well as outages across medium to long term timeframes.
  • Obtain decision support for the valuation of generation assets for M&A activities, trading strategies for gas storages (using a variety of valuation strategies like intrinsic, rolling intrinsic, spot optimal or basket of spreads), VPPs and power purchase agreements and many more
  • Perform Scenario Analysis for a wide range of user defined parameters, forward curves, portfolio mixes or model parameters such as volatilities and correlations
  • Calculate full distributions: for key output variables such as revenues, costs, profits, volumes, starts, fuel consumption and others
  • Integrate price and deal capture using your existing energy trading and risk management (ETRM) system(s)
  • Accurately value utility specific contract types:
    • Clean-Spark Spreads
    • Clean-Dark Spark Spreads
    • HDD – Heating Degree Day Swap
    • Transport Option
    • FTR (Financial Transmission Right) and RSA (Revenue Sharing Agreement)
    • 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)
  • Price, analyse and risk manage tolling agreements, off-take agreements and power purchase agreements
  • Understand your risk drivers and the effect that trades within your portfolio have on your overall risk metric and changes with risk attribution
  • Report company-wide risks across your assets and trading book and drill down to individual regions, products, trading desks, traders and deals to fully understand your risks and sources of value
  • Value and analyse complex power structures such as power swing deals
  • Analyse and report the Greeks for large books of power derivative deals