Power Market Studies

IEC specialises in producing detailed and comprehensive Power Market Studies, especially for countries located in the Asia/Pacific region.

COUNTRIES

IEC maintains comprehensive databases and has detailed simulation models for most Asia/Pacific grids including:

		Japan
		South Korea
		Philippines
		Indonesia
		Singapore
		Vietnam
		Australia
		Taiwan
		New Zealand
		China

Although our experience is primarily in countries within Asia/Pacific, IEC can also undertake market studies for other countries outside the region. We specialise in understanding deregulated Pool-type markets and hydro-dominated systems.

USERS

Our detailed Power Market Studies are useful for:

		Greenfield investors who may be seeking to understand a new market or identify opportunities
		Asset buyers who need to assess the competitive position (ie. risk) and future revenues/costs (ie. valuation) of acquisition targets
		Asset owners considering expanding their existing business or wishing to understand the impact of deregulation, future competition and/or carbon taxes
		Fuel suppliers (LNG, gas, thermal coal) who wish to understand the market potential for their product (eg. volume, timing, pricing, customers, etc).
		Large consumers (eg. Industrial users, distribution companies, retailers) who are seeking to optimise (minimise) their electricity costs
		Traders who wish to identify medium- to long-term trends in the market
		Investment banks who are advising their clients or need to assess the risk of lending to a project
		Equity analysts who require a deeper understanding of specific markets and issues
		Equipment suppliers and EPC companies who want to understand the markets trends for their products and services

CONTENT

Our market studies (in presentation and/or report format) are individually customised for each Client but typically cover the following topics:

1.	COUNTRY OVERVIEW
	Size, population, politics
	Economy
	Risks & attractions
2.	MARKET OVERVIEW
	Generation
		Capacity mix (MW %coal vs. gas vs nuclear Vs hydro Vs other)
		Generation distribution (MWh% coal vs. gas Vs nuclear Vs hydro Vs other)
		Major plant location map
		Ownership structure
		Load & dispatch curve(s)
	Transmission & Distribution
		T&D network description
		Transmission map
		Ownership structure
		T&D costs
	Retail
		Ownership structure
		Market share
		Customer breakdown
		Retail tariff structure
	Regulatory
		Regulatory framework
		Industry structure
		Deregulation & privatisation
		IPP market
		Pool market description
3.	LOAD
	Historical growth
	Load factor
	Consumer breakdown
	Peak load forecast
	Seasonal load distribution
	Daily/weekly load curve
4.	GENERATION MARKET
	Detailed plant description
	Role of hydro
	Marginal cost curve(s)
	Historical expansion plan
	Reserve margin requirements
	Spinning reserve
	Future expansion plan (Official & alternatives)
	New capacity requirements (size, type, timing, etc)
5.	NEW ENTRANT ANALYSIS
	New Entrant options (size, type, fuel)
	New Entrant assumptions
	New Entrant financial analysis
6.	FUEL SUPPLY
	Historical fuel use
	Fuel costs
	Fossil fuel (oil, gas & coal) reserves & production
	Fuel demand forecasts
	Future fuel supply options
7.	KYOTO PROTOCOL
	Current status (emissions, regulations, etc)
	Future CO2 emissions
	Impact of carbon tax
	Calculation of carbon credits
8.	MODELLING
	Analysis
		Simulation model description
		Base case assumptions
		Sensitivity testing (load growth, fuel prices, expansion plan, hydrology, carbon taxes, etc)
		Base Case results (whole system plus existing & future plants)
	Scenario Analysis (20+ year projections for each scenario)
		System reserve margin
		System marginal price
		Base load Pool price
		Plant capacity factor
		Plant revenues & costs
		Comparison of PPA vs. merchant capacity factor, revenues & EBITDA
9.	PROJECT/COMPANY EVALUATION
	Project/Company Overview (history, location map, financials, technical summary)
	Generation profile (position in merit order, seasonal/annual output)
	Regulatory status (PPAs, Pool exposure, hedging, etc)
	Other business (fuel supply, T&D, retail, non-power)
	Fuel supply (current & future)
	Revenue/EBITDA projections (Scenario Analysis)
	Risk analysis
	Future growth prospects
10.	SUMMARY & RECOMMENDATIONS
	Summary of key results & conclusions
	Opportunity description
	Recommendations for next steps

SCENARIO ANALYSIS

An integral component of our market studies is a comprehensive Scenario Analysis which identifies the key variables or sensitivities in the particular market and quantifies their respective impact on the Client’s relevant metric.

Following questions are examples of real questions asked by IEC’s Clients:

	i.	How will future oil prices affect the operation of a particular LNG-fired plant in Korea?
	ii.	How will future load growth affect the timing of new capacity requirements in The Philippines?
	iii.	How will unusually wet or dry years affect annual gas demand in (hydro-dominated) New Zealand?
	iv.	What level of carbon tax would cause LNG-fired plants to run ahead of coal-fired plants in Japan?
	v.	How will the fixed/variable cost structure of LNG affect the load factor of a new LNG terminal in Taiwan?

For each market, we rank the key factors according to their relative and absolute impact on specific projects and suggest possible mitigation strategies against downside risks.

TIMING

Depending on the Client’s required level of detail, a typical market study may take between 4-8 weeks to complete, excluding any travelling time. The preparation of a market study includes the following steps:

		Scoping. Meet with Client to discuss goal, scope, deliverables, schedule, budget, etc
		Data acquisition. Update existing database or collect data for new market.
		Model construction. Customise simulation model to meet Client’s specific needs
		Model calibration. Calibrate simulation model to fit with historical data
		Scenario analysis. Run model for multiple scenarios
		Interpretation. Collate and interpret results to identify trends, opportunities and risks
		Presentation & Discussion. Interactive session with Client
		Ongoing Support. Establish facility to enable to Client request additional analysis

COST

The cost of each market study depends on the level of analysis required, although the initial scoping phase (generally a visit to the Client’s office and 1-2 days discussion) is waived from any fee.

IEC always recommends and encourages the Client to participate in the analytical process, wherever possible, to provide feedback and ensure that the deliverables are in line with expectations.

International Energy Consultants

jmorris@energyconsultants.com.au

+61-8-9245 5453

PO Box 241
Scarborough, Western Australia
Australia WA 6922