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Energy
Trading, Risk & Prices
IPA Energy + Water Economics provides specialised support to buyers, sellers and
traders of energy in price forecasting, contracting, risk and portfolio
management, and fuel and price arbitrage. IPA Energy + Water Economics also provides
advice on all aspects of energy trading, and on the impact of market developments.
Market
Simulation
IPA’s high level modelling experience provides expertise in the
development and operation of market simulations, which are typically used
by investors seeking to enter new markets as well as Governments and Regulators
seeking to introduce competition or to restructure existing markets.
Price
Projections
IPA has considerable experience of the development of price forecasting
systems and provides routine price forecasts to a number of its Clients
as well as modelling a number of electricity markets for specific projects.
Trading
Arrangement Designs
IPA’s has extensive international experience of practical implementation
of a wide range of different trading arrangement designs. We have practical
experience of introducing trading arrangements, ensuring that a well-controlled
baseline design is applied and that a clear management change process
is established.
Trading
Systems
In new markets for electricity and gas maintaining the ability to trade
and to monitor the activities of traders is critical to the enterprise.
IPA can provide independent expert advice on the selection and procurement
of a trading IT system and its integration into the procedures and processes
established to maintain control of the activity.
Trading
Strategy & Trading Limits
Trading in energy products (electricity & gas) is critical in the
new energy markets. In many cases this is outside the skill set of incumbent
participants and brings with it large issues and risks. IPA can draft
trading procedures and define the structure and magnitude of appropriate
trading risk limits as well as advising on the risks and potential rewards
of trading in the new market structure.
Risk
Management
Risk management is a key element of controlling trading risks in the new
markets. IPA can help identify risks to the business and control trading
risks through appropriate trading strategy and trading limits. We can
also help you quantify your volumetric risk through accurate demand forecasting
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Current
and Recent Experience in Energy Trading, Risk and Prices
UK
- Electricity Trading Advice
Following Enron's demise IPA advised a trader on their contractual exposure,
giving an independent review of the valuation of the trader's UK and Continental
claim due to the termination of contracts. This entailed evaluating the
risks associated with large and varied electricity contracts, not only
in the UK under NETA but also in several Western European electricity
markets.
UK - Wind Analysis
IPA is undertaking a series of wind analysis including wind volatility
and its impact on the economics of wind generation, value of weather derivatives
for wind generation developers and how they can be used to assist in the
construction of project finance packages.
UK - AES Portfolio
IPA advised AES Medway on the strategy and structure for trading activities
under NETA and set appropriate limits to control the size and scope of
these activities. IPA defined the feasibility, scope and structure of
the trading organisations at AES Barry and Fifoots Point generating stations.
A further element of the project was to provide independent advice to
AES on the selection of a trading IT system.
UK
- Expert Witness
IPA provided advice and expert testimony on a dispute with a contracted
counter-party which had entered receivership over value of the remaining
term of a PPA; major work areas have been valuing risk and deriving an
appropriate discount rate for future revenue streams
Qatar - Capacity and Energy Billing System
IPA developed a system, which was used to produce invoices for power and
water, and replicates the calculations in the Power and Water Purchase
Agreement between 750MW Ras Laffan Power Station and the offtaker
Africa
- Risk Management
For the Africa Geothermal Eneryg Development Facility, IPA is currently
providing expertise for facilitating broadened scale geothermal energy
investment along the African Rift by designing instruments to mitigate
exploratory and financial investment risks.
UK - Forecast of CCGT Operation & Profitability
Forecast of economics of a CCGT under its current gas and power contracts,
to assess whether the project was likely to be placed into administration.
The work went on to assess the client’s potential liability under
contractual guarantees, and looked at the cost of different options for
mitigation.
UK
- Talisman Energy
IPA has been providing advice on the opportunities within the electricity
sector for a very large-scale off-shore wind generator. This has involved
reviewing the risks and opportunities to the project of the current electricity
markets, transmission arrangements and renewables obligations.
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