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We use several modeling tools to provide clients with asset valuations tailored towards their specific needs. We focus our modeling to capture market fundamentals using high quality inputs in all types of valuations.

  • Virtual Dispatch Models against Recent/Futures Prices: We use our PSO model to dispatch a specific unit against energy and ancillary service price forecasts. We are also able to model the unit dispatch against both day-ahead and real-time prices, which captures a valuable revenue stream that many dispatch models do not account for. The model outputs the expected plant operations and revenues over the modeled time period. We typically develop the energy and ancillary service price series inputs using both recent historical and future settlement prices and accounting for any known shifts in market fundamentals.
  • Nodal Market Simulation Models: We employ several nodal market simulations tools for asset valuations to simulate the long-term impacts of changing market fundamentals, including new limitations on generating resources, variability of fuel prices, and changing transmission capabilities and congestion patterns. This assessment is particularly useful to assess the value of assets in light of market changes.
  • Long-Term Planning and Capacity Expansion/Retirement Models: These models determine the value of an asset over 20 to 30 years by capturing expected shifts in system resource mix and market trends. We use this valuation method to determine the expected value of an asset over its operating life.
  • Coal Plant Economic Viability Model: This model is used to assist clients in assessing the optimal timing of economic retirement and asset valuation for existing coal units. The model takes into account the operating costs, market revenues, replacement power costs and timing of decommissioning for coal plants owned by merchant entities or rate-regulated utilities, and evaluates the retirement economics as a function of optimal unit commitment dispatch against future wholesale power prices.

Engagements
REPRESENTATIVE ENGAGEMENTS

Below is a list of representative engagements for our Generation Asset Valuation practice.

Optimization of existing hydro storage facilities' market participation

For a large generation and transmission utility operating in an RTO market, Brattle evaluated the historical energy and ancillary services market performance of a large multi-unit hydro-storage power plant. Using detailed simulations of regional market participation and statistical analysis of historical resource bids in these markets, we developed more optimal bidding strategies for the power plant. The improved bidding strategies cover energy and ancillary services in the day-ahead and real-time markets considering forecasting uncertainties. The selected strategy is forecasted to increase net plant revenues by 200 to 300% compared to historical revenue realizations.

Damages analysis for the failure of San Onofre Nuclear Generating Station

Following the 2012 failure of the San Onofre Nuclear Generating Station’s (SONGS) replacement steam generators, Brattle was retained to estimate damages from the delay or possible inability to repair and restore the plant. Our approach involved the use of two power price forecasting models, Xpand, for long-run capacity replacement, and PSO, for local congestion price premiums in the Los Angeles area most affected by the outage. These were used to estimate expected power prices and greenhouse gas (GHG) prices in California through 2050. The GHG component of the model included costs of carbon mitigation from both the power sector and the commercial and transportation sectors of the California economy. Results were accurately benchmarked against historical unit dispatch and near-term forward prices for power. Alternative repair scenarios were evaluated and uncertainty surrounding long-term plant viability was captured with an options framework to simulate plant operations under range of likely market fundamentals.

Valuation of a portfolio of combined-cycle plants across the U.S.

For a debt holder in a portfolio of plants, we estimated the fair market value of each plant in 2018 and the plausible range of values in five years. We analyzed electricity markets in New England, New York, Texas (post-tightening of the market in 2018), Arizona, and California using a variety of models, and performed probability-weighted discounted cash flow (DCF) valuation analyses across a range of scenarios. Our analysis allowed us to provide insights into the market and regulatory drivers and how they may evolve.

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