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AleaSoft, January 22, 2021. The long‑term energy markets prices forecasts are useful beyond the moment they are made. They are the support for the decision made at the time of signing a PPA, making an investment or buying energy in the futures market.

The energy markets prices forecasting is not a perishable product. At the time of making the forecasting, it has the function of providing a clear vision of the future of the energy markets, their prices and the factors that will influence them. The long‑term prices forecasting is necessary when negotiating a PPA and as input to the financial models for investments in renewable energy projects.

Retrospective energy markets prices forecasting

But a prices forecasting made in the past also has its function and utility. It can be very useful having a retrospective forecasting to analyse if the decision of investment, merger, acquisition, energy purchase or PPA signing that was made at that time in the past was reasonable given the estimates of the prices in the future available at that time.

This exercise of retrospective analysis of investments and decisions, beyond an individual or particular exercise of a company, may be required for an audit. The account audits require documentation that accredits and justifies the investment decisions made at each moment, and may require a retrospective forecasting.

Obviously, the most advisable thing is having periodic forecasting, ideally long‑term prices forecasting for the last five years at least, on a quarterly basis, that is, one forecasting per quarter. The auditing companies recommend prices forecasting with a thirty‑year horizon and hourly breakdown of the captured prices and the photovoltaic energy production. In this way, the accounts will be supported by the information available at each moment. But as an alternative option, getting a retrospective forecasting can be a viable solution.

The “auditable” prices forecasting

The company AleaSoft is a provider of forecasting and studies for the energy sector. Its thirty‑year forecasting, with hourly price details for the entire horizon, are bankable, which means that the financial institutions accept them as input to the financial models of the projects.

Furthermore, some consulting companies are currently beginning to recommend the AleaSoft‘s forecasts. So it could be said that these forecasts will also become “auditable”, that is, they will be accepted as input for the financial models and the portfolio valuation during the account audits.

The advantages of the AleaSoft methodology are that they are scientifically based models, based on the hybridisation of classical statistical techniques with Artificial Intelligence and Machine Learning methodologies. These models generate robust and coherent forecasts. In addition, the methodology allows obtaining confidence bands that provide a probabilistic metric, essential when quantifying the risk management.

AleaSoft - AleaModel characteristicsProperties of the Alea methodology for forecasts for the energy sector.
Source: AleaSoft.

Information and analysis of the energy markets in Europe

At AleaSoft, a wide variety of reports for the energy sector that cover the main markets of Europe are available. In addition, new complementary services associated with the long‑term prices curves reports are also offered to advise on the use of them.

The cycle of webinars “Prospects for the energy markets in Europe from 2021” is being carried out with the participation of speakers from the most important companies of the energy sector in Europe. The third part of this series is scheduled for February 18, and this time it will feature the collaboration of ENGIE, to analyse the prospects for the energy markets and the financing of the renewable energy projects from this 2021. Later, the fourth part of the webinar series is scheduled for March 18 and it will feature the collaboration of speakers from EY (Ernst & Young).

At AleaSoft, workshops on tools for the monitoring and the analysis of the energy markets in Europe are also being organised. The next workshop will take place on February 4 and it will show the Alea Energy Database (AleaApp) for the compilation, visualisation and analysis of data related to the energy markets. The next workshop is scheduled for February 11, and it will show to the agents operating in the electricity spot and futures markets how to take full advantage of the mid‑term market prices forecasting and stochasticity.


Source: AleaSoft Energy Forecasting.