Policy & Regulation
European power markets are going through a period of profound transformation. The growth of renewables, depressed power demand, and the evolving regulatory framework are combining to impact plant revenues and market risk. As a result, electric utilities, generators, and traders face strategic choices. To respond to these challenges, FTI Consulting and its subsidiary, Compass Lexecon offer a highly interactive and customised approach which includes senior experts’ inputs on key regulatory and market design issues, and in-house models of markets for energy, capacity, and ancillary services to support market design and strategic analysis.
Our Service Offerings
Wholesale Market Design & Implementation
Within the wholesale energy market, market design addresses key issues such as market trading arrangements as well as regulations and rules that govern the operation of the different stakeholders. FTI Consulting and its subsidiary, Compass Lexecon have experts well versed in advising clients on high-level market design and detailed implementation. Some of our professionals are former regulators who give us critical perspective. We provide advice on market design rules to governments and regulators. Also we advise companies that are subject to these rules on what they might mean for their business model and strategy, what they need to know to comply, how they can assess the impact of these rules, and what alternative approaches are feasible. Our expertise ranges from drafting detailed market rules and codes to providing training to market participants on how to change the operating practices in order to comply with the rules.
Market Integration & Cross-Border Trade
European electricity markets are in the process of integration — involving both harmonisation of market designs across national electricity markets and ensuring that these markets operate in an integrated manner using the cross-border transmission capacity in the most efficient way across all timeframes. The Target Model for the European-integrated electricity market is defined by a number of Network Codes that set the rules and obligations that govern access to, and use of, the European energy networks. Implementation of the Target Model presents a number of opportunities and risks for market participants. FTI Consulting and its subsidiary, Compass Lexecon have regulatory and market design specialists to help European regulators, TSOs and utilities design and implement the mechanisms of market integration taking into account the impact on costs and benefits to a variety of market participants both on a regional and local level.
Capacity Mechanisms & State Aid
Concerns about security of supply have led many governments to introduce capacity mechanisms which remunerate plants available in addition to their revenues derived from selling energy on the wholesale market. FTI Consulting and its subsidiary, Compass Lexecon have strategy and regulatory experts to assist regulators and utilities in the design and implementation of capacity markets that consider the costs and benefits to governments, utilities, power consumers and other market participants. In addition, our experts have advised clients in the UK, France, Italy, Greece and Belgium on the state aid approval process by the European Commission of the capacity mechanisms in these countries.
Balancing & Ancillary Services Markets
In the day-ahead and intraday electricity markets, one can buy and sell electricity at any particular hour of the day in advance of the delivery. Providers of energy storage, demand-side response, and flexible generators looking for opportunities to increase the market value of their assets may consider other markets. This may include the balancing markets clearing close to or in real-time or ancillary service markets, such as markets for operating reserves. Such markets may be particularly useful to value flexibility provided to the market. The Energy professionals at FTI Consulting and its subsidiary, Compass Lexecon are adept at developing strategies and scenarios that take advantage of such markets.