analytical methodology

Power price analysis: focus on what matters | 18 Sep, 2017

We apply three simple rules when we analyse power prices: Confront the reality that the price forecast is going to be wrong Define the key mar ...

Long term contract pricing: 5 key drivers | 23 May, 2016

Long term contracts play an important role in enabling the owners of flexible gas and power assets to monetise asset value and manage market risk. Com ...

Long term contract pricing: counterparty motivations | 11 Apr, 2016

The pricing terms of long term contracts on flexible gas & power assets are typically the subject of lengthy negotiations. They also often remain ...

A revival in contracting of flexible assets | 21 Mar, 2016

Long term contracts are a cornerstone of the energy industry. They play a key role in underpinning the capital expenditure required to develop assets. ...

An analysis of European hub price correlation | 25 Jan, 2016

Trading in the European gas market has developed around a two tier structure of trading hubs.  Forward liquidity is focused at the UK NBP and Dutch ...

Risk management done the right way | 18 Jan, 2016

A risk manager’s life is not an easy one. Their role by definition is one of vigilance and challenge. Yet a good risk manager can be a facilitator w ...

Implied vs historical gas price volatility | 16 Nov, 2015

European gas hub markets are maturing. This can be seen via the increase in range and liquidity of traded products. Growth in trading activity is focu ...

Defending energy portfolios against a credit event | 12 Oct, 2015

Last week we looked at the threat of a systemic credit event in energy markets. Market prices are flashing a warning signal about the capitalisation a ...

Oil market illustrates risks of relying on price forecasts | 15 Jun, 2015

Commodity price forecasts are widely used across energy markets. Forecasts are used as an input for a range of commercial activities including busines ...

Acquisitions and monetising asset value | 11 May, 2015

European energy asset transaction activity is on the rise. After ambitious but largely unsuccessful growth and acquisition sprees last decade, utiliti ...

The dangers of mixing forecasts and forward curves | 30 Mar, 2015

Forward market liquidity has steadily developed with the evolution of traded gas and power markets in Europe. This has supported traders and asset man ...

Falling fuel prices and thermal plant margins | 26 Mar, 2015

There have been some big moves in commodity prices and currencies so far in 2015.  Sharp declines in oil, gas and coal prices have reduced the fuel c ...

Monetising the value of flexible gas & power assets | 09 Mar, 2015

Flexibility value is a term often loosely used in association with gas and power asset optionality. It is a simple and widely accepted principle that ...

Market benchmark for gas flexibility value | 09 Feb, 2015

After a recovery in the first half of 2014, seasonal price spreads at European hubs have again fallen back towards historically low levels (currently ...

Spot vs forward price dynamics: UK gas case study | 17 Nov, 2014

Commodity markets are plagued by confusion as to the relationship between spot and forward prices.  There are good reasons.  The relationship is not ...

First UK capacity auction in focus | 27 Oct, 2014

Note: Several hours after this article was published DECC announced that they had revised the 1st auction capacity target down.  The article has now ...

European hub price volatility on the rise | 21 Jul, 2014

It is a common characteristic of energy markets that prices and volatility tend to be positively correlated.  This reflects the fact that price distr ...

A practical view of the flexibility value of gas and power assets | 30 Jun, 2014

Flexibility value has become a popular concept in energy markets.  At a qualitative level the benefits of flexibility are reasonably well understood. ...

Risk management of optionality in energy portfolios | 05 May, 2014

This is the third in a series of articles on the principles of energy risk management, written by Nick Perry. Energy portfolios are rich with physi ...

Unique energy risk management characteristics | 07 Apr, 2014

This is the second in a series of articles on the principles of energy risk management, written by Nick Perry. In the previous article we considere ...

There is more to energy risk management than option theory | 17 Mar, 2014

This is the first in a series of articles on the principles of energy risk management, written by Nick Perry. The business of energy companies incr ...

GasTerra storage auctions & flexibility value implications | 10 Feb, 2014

Twice a year GasTerra auctions Dutch storage capacity.  The price the market is willing to pay for this capacity provides a useful insight into the v ...

Conventional power plant value analysis has evolved | 20 Jan, 2014

The value of European gas and coal fired power plants is a very different proposition to what it was 5 years ago.  Growth in renewable output has ero ...

Price spikes and the value of gas flexibility | 06 Jan, 2014

European gas hub price volatility has been in steady decline over the last 3 years.  We explored the factors behind subdued volatility in an article ...

2013: Study the past if you would define the future | 09 Dec, 2013

With Christmas rapidly approaching this is the last blog article for 2013.  We will be back next year on the 6th January.  But to finish off this ye ...