AleaSoft Energy Forecasting, May 23, 2025. Understanding and anticipating the electricity market requires a vision of the different horizons. Short‑, mid‑ and long‑term forecasts allow optimising daily operations, managing risks and guiding strategic decisions. Their integration is key for all players in the energy sector who need to adapt to an increasingly dynamic environment.
A sound energy strategy begins with a solid understanding of the different time horizons and their applications. Short, medium and long term, each horizon serves different objectives, but together they provide a coherent view of the present and future of the electricity market.
Short term: from hours to a few days
Short‑term forecasts, ranging from a few hours to several days, are essential for the daily operation of energy assets, the participation in spot and intraday markets and the management of ancillary services. They are particularly relevant for the real‑time operation of renewable assets, batteries and hybrid systems of batteries with renewable energy, as well as for the hourly management of electricity demand in a context of high variability. Utility or independent power producer (IPP) control centres, as well as storage operators and aggregators, depend on this type of forecasts to adjust their production, minimise deviations and maximise revenues. This horizon is also particularly relevant for retailers who need to set competitive prices and adjust their client portfolio on an hourly basis, as well as for traders looking for arbitrage opportunities.
These forecasts are characterised by their level of detail, with hourly or even fifteen‑minute granularity, which allows precise management of the operation. In addition, they allow estimates of market prices, electricity demand and renewable energy production to be obtained with a high degree of reliability, which makes them an indispensable tool for adapting quickly to the changing dynamics of the electricity system.
Medium term: from weeks to months
When addressing operational planning over horizons ranging from weeks to months, mid‑term forecasts become a key tool for risk hedging and strategic decision‑making. Retailers, traders, large industrial consumers and utilities use them to define forward purchasing strategies, optimise bilateral contracts, schedule the maintenance of their assets or hedge positions in futures markets. This type of forecasts also allows for the evaluation of the economic impact of operational decisions under different climate and market conditions, integrating factors such as seasonality, hydraulic availability or wind and solar variability, which condition energy balances.
This horizon is particularly valuable for electro‑intensive industries planning production based on expected price trends, as well as for generators who must assess market scenarios before committing to hedging strategies or mid‑term contract structuring.
Mid‑term forecasts can be provided with hourly, daily, weekly or monthly granularity, and they are characterised by the use of methodologies that incorporate stochasticity and probabilistic scenarios, which allow the uncertainty inherent in the electricity system to be captured more realistically.
Long term: from years to decades
Long‑term forecasts, extending to horizons of 10 to 30 years with hourly resolution, are essential to guide structural decisions in the context of the energy transition. This type of analysis supports the assessment of the viability of new investments in renewable energy generation, energy storage, electrification of industrial processes or production of renewable fuels such as green hydrogen. They are also used in mergers and acquisitions (M&A) processes and in the renewable asset valuation, where it is necessary to project long‑term revenue streams and profitability scenarios.
These forecasts are indispensable for developers, banks and investment funds that require robust financial models and bankable studies. They are also key for system operators, regulators and energy planners, who must design energy infrastructure and policies aligned with climate and supply security goals.
Industrial companies evaluating the feasibility of self‑consumption or battery integration, as well as generators seeking to structure PPA (Power Purchase Agreements) to stabilise revenue streams, rely on these long‑term scenarios.
From a methodological perspective, the most reliable long‑term forecasts are based on hybrid models that combine statistical models, artificial intelligence and fundamental models, which maintain market equilibrium and consider the evolution of supply, demand and marginal system costs. These models also incorporate macroeconomic, regulatory, technological and commodity price variables, such as natural gas and CO₂ emission allowance prices, allowing for the construction of scenarios coherent with the structural trends in the energy sector.
A cross‑cutting tool for all players in the sector
The combination of short‑, mid‑ and long‑term forecasts not only enables agile operations in the present but also provides a solid foundation for long-term planning. This integrated view is already a standard practice among a wide range of players, including retailers, large consumers, system operators, traders, developers and control centre managers. Each has specific needs, but all share the goal of anticipating changes, optimising resources and making informed decisions based on reliable data.
Source: AleaSoft Energy Forecasting.AleaSoft Energy Forecasting’s analysis on the prospects for energy markets in Europe and batteries
On Thursday, May 22, a new edition of AleaSoft Energy Forecasting’s monthly webinars was held, reaching the 55th edition. On this occasion, Javier Adiego Orera, CEO and co‑founder of 7C Energy, was one of the guest speakers, to address energy storage with batteries. During the webinar, topics such as the importance of demand and secondary band forecasts, the impact of the degree of use on the profitability of batteries, their financial optimisation and regulatory aspects, including subsidies and capacity payments, were discussed. As usual, the recent evolution of European energy markets and their prospects were also analysed.
The analysis table of the webinar in Spanish also included the participation of Kiko Maza, Managing Director at WeMake Consultores, and Luis Atienza Serna, former Minister of the Spanish Government and former President of Red Eléctrica. Among the topics discussed was hybridisation with wind energy, ancillary services and electricity transmission and distribution grids.
Source: AleaSoft Energy Forecasting.
