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Defending energy portfolios against a credit event
Last week we looked at the threat of a systemic credit event in energy markets. Market prices are flashing a warning signal about the capitalisation and interrelated exposures of a number of large...
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Implied vs historical gas price volatility
European gas hub markets are maturing. This can be seen via the increase in range and liquidity of traded products. Growth in trading activity is focused on the UK NBP and Dutch TTF hubs, with TTF...
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Risk management done the right way
A risk manager’s life is not an easy one. Their role by definition is one of vigilance and challenge. Yet a good risk manager can be a facilitator within the bounds of their control mandate, rather...
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A revival in contracting of flexible assets
Long term contracts are a cornerstone of the energy industry. They play a key role in underpinning the capital expenditure required to develop assets. They also play an important role in ensuring...
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Long term contract pricing: counterparty motivations
The pricing terms of long term contracts on flexible gas & power assets are typically the subject of lengthy negotiations. They also often remain a closely guarded commercial secret. This is...
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Long term contract pricing: 5 key drivers
Long term contracts play an important role in enabling the owners of flexible gas and power assets to monetise asset value and manage market risk. Common examples in power markets include tolling...
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Evidence of a 2016 recovery in gas price volatility
Prompt gas price volatility is the key market price signal for short term supply flexibility response. Volatility plays a key role in determining the risk that gas suppliers face in supplying customer...
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Long term contracting to support asset financing
Infrastructure investors are set to feature as prominent buyers of conventional supply assets, as utilities ramp up asset sales in Europe. European utilities have traditionally had the capacity to hold...
View ArticleContracting for market access via a 3rd party
A major transition is taking place with European energy asset ownership structures. Thermal power and midstream gas assets have traditionally been owned by utilities and producers. But asset...
View ArticleMarket access contracts: 5 success factors
Owners of gas and power assets in Europe are increasingly contracting 3rd parties to provide market access services. This is a function of changing asset ownership structures. Utilities and producers...
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Interpreting TTF implied volatility
The European gas options market is still in a relative state of infancy versus for example the crude options market. But as TTF gas hub liquidity grows, the options market continues to mature. This is...
View ArticlePlant closure: drivers of the decision to close
European power markets are facing a demographic issue. Flexible thermal generation capacity is ageing at a faster rate than it is being replaced. This phenomenon is consistent with the intentions of...
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At the flicks: gas curve animation
Energy markets are awash with charts. We work in a data intensive industry and a good chart can be worth a thousand words. But charts by nature provide a static view of factors such as price, volume,...
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Monetising European gas storage value
Storage capacity is a feature of most European gas portfolios. Traders and portfolio managers use storage as a key source of midstream flexibility to manage volume and price risk within portfolios....
View ArticleBuilding an energy trading capability
To trade or not to trade. This has been a philosophical question confronting energy company boards since the liberalization of energy markets. Trading is the core focus of some company business models...
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Battery investment 2: Monetising battery value
2019 may be the breakthrough year for merchant battery investment in the UK. Battery developers have re-focused investment cases on wholesale market returns, given declining ancillary revenues, cuts...
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Power plant optionality & dispatch cost hurdles
The transition taking place in European power markets is reshaping supply stacks. Retiring coal, CCGT & nuclear plants are being replaced with a combination of: Renewables: zero/low variable cost...
View ArticleShock suspension of UK Capacity Market
Last Thursday the UK government abruptly halted the Capacity Market to comply with a European Court of Justice (ECJ) ruling. The implications of this are an immediate stop to capacity payments under...
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Boosting midstream asset value capture
This decade has been a tough one for owners of flexible midstream gas assets such as storage, pipelines & regas terminals. Asset returns have been hit by a post financial crisis overhang of supply...
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5 energy market surprises for 2019
Welcome back to our first feature article for 2019. As has become tradition we start the year with five surprises to watch for on your radar screens. Usual caveat: these are not forecasts or...
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The changing role of UK’s gas interconnectors
2019 is going to be an important year of transition for the two key interconnectors that link the UK with Continental gas markets. The IUK pipe between UK and Belgium is entering its first year without...
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Resurgence in UK gas storage value
Investment in gas storage, like most energy asset classes, has strong cyclical dynamics. Storage cycles are reinforced by relatively long project construction lead times. It can take 3 to 5 years to...
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Building a viable battery margin stack
We flagged a ‘take off’ in European merchant battery investment as one of our 5 surprises to watch out for in 2019. Investment momentum has been accelerating as the year progresses, and merchant...
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Gaining an edge: LNG portfolio analysis
Commercial evolution of the LNG market has accelerated over the last three years. This is the result of new and more flexible sources of supply. But it also reflects new market players, rising...
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Hydrogen’s path into the gas supply chain
Governments in most of the largest European gas markets are committed to COP21 decarbonisation targets. Some future targets are likely to be missed. But it now appears very unlikely that governments...
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